MISREPRESENTATION

I. INTRODUCTION

A. Misrepresentation generally:  Misrepresentation has been discussed in the context of several of the torts we have already examined. For instance, where a negligent representation leads to physical harm (e.g., a truck driver carelessly signalling a motorist to pass him when it is unsafe), an ordinary negligence action may be brought; see supra, p. 98. Similarly, if a seller of products makes an express warranty about them, and this warranty turns out to be false (e.g., car with “Shatter-proof” windshield – see Baxter v. Ford Motor Co., supra, p. 352), a products liability action may be brought. In these situations, the misrepresentation is simply one aspect, one method of accomplishing, the more general tort of negligence, strict liability, etc.

1. About this chapter:  In this chapter, we are concerned with misrepresentations that cause only intangible pecuniary loss. Because courts have always been more reluctant to impose liability for this kind of loss than for direct physical injury or property damage, special rules have grown up governing those misrepresentations that have this effect. Most of this chapter will be devoted to intentional misrepresentation, which corresponds to the common law action of “deceit”. The growing willingness of courts also to impose liability for negligent misrepresentation, and, in some cases, for innocent misrepresentation (i.e., strict liability) is also discussed.

II. INTENTIONAL MISREPRESENTATION (“DECEIT”)

A. Common law action:  The common law action of “deceit”, or “fraud”, corresponds to what we would call today “intentional” misrepresentation.

1. Elements of cause of action:  To recover for intentional misrepresentation, the plaintiff must establish the following elements:

a. A misrepresentation by the defendant;

b. Scienter (i.e., a culpable state of mind, either knowledge of the statement’s falsity or reckless indifference to the truth);

c.  An intent to induce the plaintiff’s reliance on the misrepresentation;

d. Justifiable reliance by the plaintiff; and

e. Damage to the plaintiff, stemming from the reliance.

See P&K, p. 728.