The Tort of Deceit - Coursework Example

Tort of Deceit By Name The Name of the Class (Course) Professor (Tutor) The Name of the School (University) Date of Submission INTRODUCTION Tort comes from the Latin word “tortus”, which means crooked while in French the same word means “wrong”. As argued in the case of Smith V. United States (1993), tort is a civil wrong that can get redress through civil claims. Deceit is one among the many torts that a person can sue and be sued for under the laws of tort. Fraudulent misrepresentation or misstatement results from a false statement made, upon which a party acts on this same information and suffers damages as a result. Unlike other torts such as negligent misstatements, the laws of deceit dictate that the defendant must have knowledge of the deceit beforehand. In business, parties rely on information offered to them to make decisions. In several instances, some parties may offer reckless and sometimes-fraudulent statements aimed at influencing and deceiving the other parties. In addition to being a civil claim, the parties may also decide to level criminal proceedings against the other party for issuing such information. This paper seeks to explore the legal actions and options available to a party suffering from fraudulent misrepresentation. It also offers insight into the possibility of criminal liability based on facts from a simple case. ELEMENTS OF TORT OF DECEIT The tort of deceit as in other torts offer civil remedies to the party affected. The party must prove that using the false information was detrimental to their condition. Some of the elements to fulfil in the tort of deceit involve proving the loss suffered was a consequence. The party must prove that the other party made a false representation to them. They must prove the other party was well aware the representation was false. The party must prove there was an intention to deceive and thus acted upon. The tort of deceit cases often emanate from the insurance industry where individuals makes false claims to the insurer in vehicular accidents. An individual may cause damage to their own motor vehicle and claim another vehicle caused the damage, to which the insurance company compensates the individual; the insured is there for liable to the insurance firm for tort of deceit (Thompson 2006 888). The implication of misinterpretation made via actions, words or conduct. A critical factor to note, non-disclosure is not tantamount to deceit where it is done in the usual course of business. That is to mean that if non-disclosure occurs regularly and consistently with the owner of information believing it to be true, then it cannot be said to be deceit. In the case under study, Mr. Eggplant made the business’ accounting figures and it can be said that he was party to the tax filings made on the behest of the business. Therefore, he it can be argued that he knew of the true nature of the business from these accounting figures offered to Mr. Manfredi. His actions and conduct betray the misrepresentation as he actively engaged in creative accounting. Furthermore, he knew that Mr. Manfredi would rely on these figures in making the deceion on whether to purchase HappyHippie Pty Ltd. One of the elements of tort of deceit states the individual ought to prove the other party was well aware the representation was false. In Derry vs. Peek (1889), the board of a firm believed accessing certain rights would offer the organization a competitive advantage in the market. these rights were to be conferred upon the firm in a time after it had sold its shares to the public. Knowing the certainty of this, the company directors quoted in the prospectus that the corporate body had obtained these rights, though it was yet to on paper. The ruling determined they were not liable for the tort of negligence, as they did not make any fraudulent misrepresentation. The case ruled that for a tort to qualify as deceit, it must be made with the full knowledge and willingness of the defendant to pursue a certain goal. A reckless statement made to a gullible person also qualifies as deceit. In this case, the defendant must have knowledge that the gullible person relies on his (defendant) statements when making decisions. Therefore, a company director who makes careless statements about the health of the company is liable under the laws of deceit if his statements come to naught. In the case, Mr. Eggplant made the false statements with full knowledge. The historical accounting figures were overstated by exactly 60%. However, the tax registers told a different tale and it not difficult conceiving why records could be so consistently void of the truth. Tax registers, cash register tapes and receipts from the business further proved that the director, Mr. Eggplant was fully aware of the fraudulent misrepresentation. Another case setting precedent regarding tort of negligence is Smith v Land & House Property Corp (1884). In the case, it was upheld a man’s mind is a state of fact likened to the state of digestion. In the sample case, what Mr. Eggplant was presenting to Mr. Manfredi was not a mere opinion. Rather, it was a qualified fact given that the defendant knew the nature of the hotel intimately. His intentions, therefore, were to deceive the plaintiff into buying the property as he knew there was not gain to be made from such a venture. Under the tort of deceit, the plainfiff faces a sterner test than the one faced by plaintiffs in other torts. Under deceit, the plaintiff has to prove that there was a special relationship between himself and the defendant. The defendant often has to know that the plaintiff will depend on the statements made in making the decision and this must be proved. Such a relationship often occurs under the confines of an agency relationship where one party is hired to coudct business at the behest of another. In instances where the defendant failed to approach them directly but addressed them using the statement, often classified as defenders. In such an instance, a false misrepresentation in a prospectus can be established by one of the shareholders who bought shares based on the statement. In the case in question, the defendant knew propping up the numbers would make the business seem profitable and thus a target for purchase by the plaintiff (Zhou 2009 97). In the case of Smith New court Securities v Scrimgeour Vickers (1996), it was argued that the defendant is more liable when he knowingly intends to commit harm. Unlike other torts, the tort of deceit allows the plaintiff to claim for losses made long after the stort has been commited. As such, the defendant is liable for the tort of deceit as well as all other damages that accrued as a result of the deceit. The case of Hedley Bryne vs. Heller & Partners (1964) ruled there needs to exist a relationship between the claimant and the defendant. This relationship safeguards the duty of care. In the case, Mr. Manfredi thought a duty of care would arise based on his relationship with Mr. Eggplant. It was expected that Mr. Eggplant would prepare financial and accounting statements of the business that show the truthful nature if the business before selling it. Mr. Eggplant failed to show due care by preparing false statements and failing to excuse himself from this duty if he felt inept. The significance of this action led to the insinuation that the defendant owed the plaintiff a duty of care and that, the defendant correctly accepted the duty. Mr. Manfredi was not to exercise supplementary action as regards the statements presented to him by the defendants in this case. Had the defendant attached a disclaimer notice on the financial statements, it would have been argued that Mr. Manfredi was expected to hire a person with accounting and taxation knowledge to look into the matter at hand. That way, he would be excising due diligence on the statements. The lack of such a notice negated the need for further examination of the financial statements. In law, there exsts two persons, natural person and the corporate body. It is held that the natural person is different from the body corporate and that both can be sued and sue in their own names Salmon v A. Salmond & Co. Ltd (1897). The case established reason that a person can run a business on the behalf of another and be idenmnified from the losses made out of the venture. In this case, Mr. Eggplant was carrying out business on the behalf of happyHippie Pty ltd. The mae establishes that business was a company, seting ground for a sharp distinction between its director and its onw self under the confines of law. However, in the case of Chandler v Cape Plc (2012), this limited liability clause allowed through incorporation can be dismissed to deal with the matter beforehand. In this capacity, Mr. Manfredi may in turn decide to sue the defendant Mr. Eggplant for deceit. Mr. Manfredi needs to prove that he suffered losses resulting from the actions taken as intended by Mr. Eggplant. To prove this important factor, the Re polemis test of remoteness is applied. In most instances where the test takes place, only those damages that satisfy the requirements of the test receive compensation. Under the tort of deceit, the test of foreseeable damages does not apply. In the event that Mr. Manfredi indicated, he would purchase the business despite its financial condition, there would be no course of action as the actions would not amount to tort of deceit. In presenting his claims for damages to which Mr. Eggplant is liable, Mr. Manfredi may claim damages to the tune of the difference between the overvalued cost of the business and the real cost of the business based on the facts before the court. Where an estimate on the real cost can be established, this is right remendy under deceit. Such an action would be because during the time from which he purchased the business, he did not engage in any business engagements that led to him incurring losses. The court may also offer damages if he proves he suffered losses from business. It may also offer exemplary damages if he proves he suffered pain, anguish injury to his feeling or inconvenience owing to the business transaction. The court may also offer damages for the time spent deal with a certain issue at the expense of engaging in alternative business transactions. Some of the defenses the Mr. Eggplant may pose in a court include contributory negligence. This was however proven otherwise when the defendant assumed the duty of care in the matter. Being a civil crime, the tort of deceit overlaps criminal liability. In some countries, deceit is a crime meaning criminal proceedings against Mr. Eggplant instituted. In such instances, the matter needs resolution civilly before instituting criminal charges. CONCLUSION The tort of negligence is a common tort under the Australian law established under the English customary law. The fact that laws of tort made on case-to-case basis, it is difficult to establish the right remedy for breaches and injury from tort. For the case to hold, Mr. Manfredi ought to prove to the court there existed deceit or misrepresentation advanced by Mr. Eggplant. If the defendants, opts and stands by a historical document that is in one way or another deceptive, they cannot be held liable for the tort of deception. For the actions of the defendant to amount to deception, the defendant must have acted in a way that is dishonest because the state of a man’s mind is a fact (Rosen 2005 43). Based on such critical factors and facts of the case, the defendant, Mr. Eggplant was thus aware the information they presented to Mr. Manfredi were falsifications based on the evidence of the cash till tapes and the tax receipts. The actions of propping up the numbers of the company to up to 60% further tell of deceit by the defendant. Mr. Manfredi can thus sue for deceit. Bibliography Articles and Books Rosen, MJ 2005, 'TORTS: DECEIT: DETERMINATION AND MEASUREMENT OF DAMAGES', California Law Review, 43, 2, p. 356 Zhou, Q. 2009, "Economic analysis of the legal standard for deceit in English tort law", European Journal of Law and Economics, vol. 28, no. 1, pp. 83-102. Thompson, R.B. 2006, "Federal Corporate Law: Torts and Fiduciary Duty", Journal of Corporation Law, vol. 31, no. 3, pp. 877-891. Lipner, S.E. & Catalano, L.A. 2009, "The Tort of Giving Negligent Investment Advice", The University of Memphis Law Review, vol. 39, no. 3, pp. 663-726. Foster, N 2003, 'Liability of Company Officers for Company Torts: Standard Chartered Bank v Pakistan National Shipping Corporation {2002} UKHL 43; {2002} 3 WLR 1547, {2003} 1 All ER 173', Newcastle Law Review, 7, 1, pp. 53-64 Wax, M. 1985, DETECTION AND ESTIMATION OF SUPERIMPOSED SIGNALS (ARRAYS, MDL, AIC), Stanford University. FEDERAL COURT OF AUSTRALIA ISSUES DECISIONS ON NORTH EAST EQUITY V PROUD NOMINEES 2010, , Washington, D.C. Gergen, MP 2013, 'Negligent Misrepresentation as Contract', California Law Review, 101, 4, pp. 953-1011 Pearce, D. 2002, "Farley v. Skinner: Right or wrong?", The Cambridge Law Journal, vol. 61, pp. 24-27. Fordham, M. 2008, "RISK AND ANXIETY-DEFINING DAMAGE IN THE TORT OF NEGLIGENCE", Singapore Journal of Legal Studies, , pp. 193-204 Cases Chandler v Cape Plc (2012)  EWCA Civ 525 Derry vs. Peek (1889)  LR 14 App Cas 337 Hedley Bryne vs. Heller & Partners (1964) AC 465 Salmon v A. Salmond & Co. Ltd (1897) AC 22  Smith v Land & House Property Corp (1884) 28 Ch D 7 Smith V. United States (1993) 507 U.S. 197 Read More