sentation 6. The repre- Sixthly, in order to give rise to the right to rescind the contract, the representation must have been made as a part of the transaction ending in the formation of the contract. It must not have been a statement made in must be a part of the transaction ending with of the con tract. sentation must have induced the contract. the formation dependently of the negotiation preliminary to the contract (). Seventhly, the representation must have 7. The repre- actually induced the party misled to make the contract; it must have been an effective cause of his entering into the agreement (y). If he did not act in reliance on the statement made, but used his own judgment, there is no ground for rescinding the contract (s), or for maintaining an action of deceit where the misrepresentation was fraudulent (a). So it has been held, in a case where active concealment of a defect was alleged as a fraud justifying the rescission of a contract, that a purchaser who had made no inspection of the defective article before buying it, did not act upon any implied representation of its soundness, and so could not avoid the defendant must show that the plaintiff himself had acted fraudulently. Substantially, however, the facts there alleged appear to have been sufficient to give the defendant a right to relief under the common law as to innocent misrepresentation. That is to say that, if he had relied on the agent's representation as forming a part of the contract, he might have established the right to rescind it before it had been executed in his favour (and apparently it had not been so executed, since he had not taken possession; see Mostyn v. West Mostyn Coal and Iron Co., 1 C. P. D. 145); or if the agreement had been so performed he might have recovered damages for breach of warranty that the representation was true; see 6 M. & W. 369, 372, 373; National Exchange Co. v. Drew, 2 Macq. 103, 108, 109, 145; Willes, J., Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259, 262; above, pp. 724, 727, 728. Under the present law of rescission for innocent misrepresentation, it can scarcely be doubted that a party to a contract for the sale of land would be entitled, if misled in the same circumstances as the defendant in Cornfoot v. Fowke, to rescind the contract before completion: but if he were to claim rescission after completion, it appears that the decision in that case would still be in point. It is thought however that he might, after completion, recover damages for breach of the warranty implied by the representation; De Lassalle v. Guildford, 1901, 2 K. B. 215. (a) See Hopkins v. Tanqueray, 15 C. B. 130; Way v. Hearn, 13 C. B. N. S. 292; Peek v. Gurney, L. R. 6 H. L. 377; and cf. above, p. 731. (y) Above, p. 722, and n. (¿). (2) Jennings v. Broughton, 17 Beav. 234, 238, 239, 5 De G. M. & G. 126, 138. (a) Smith v. Chadwick, 9 App. Cas. 187, 195, 196. the agreement (b). But if any artifice were used to conceal a defect prior to the sale of land, it is thought that the vendor could not enforce the specific performance of the contract, although the purchaser had not inspected the property (c). Where a person has acted on the faith of a false representation made to him, it is no defence to any proceedings founded thereon that he might have found out the truth if he had made inquiry (d). Lastly, the party to whom the represen- 8. The party tation was made must not have known that it was false; he must reasonably have believed it to be true. have seen that he has no cause of action if he aware of the true facts of the case (e). have been claiming to misled must We were not have known that the statement was false. What is requisite to action of maintain an deceit for a false repre To maintain an action of deceit for a false representation, which has induced one to enter into a contract, the same conditions are in general necessary as are required to confer the right to rescind the contract (f); and in addition to these, it must be shown that the false state- sentation inducing a ment was made, either knowingly, that is, without contract. belief in its truth, or recklessly, that is, without caring whether it were true or false (g). Where these con- Motive, as a ditions are fulfilled, it is not necessary to prove that rule, im the false statement was made with the actual intention of defrauding, cheating or wrongfully gaining some advantage over the party so deceived; for if the statement were made knowingly or recklessly, a fraudulent intention will be inferred (). So also where an action (b) Horsfall v. Thomas, 1 H. & C. 90; see above, p. 686, n. (1), as to this case. (c) See above, p. 687. (d) Dyer v. Hargrave, 10 Ves. 505, 509, 510; Dobell v. Stevens, 3 B. & C. 623; Reynell v. Sprye, 1 De G. M. & G. 660, 710; Price v. Macaulay, 2 De G. M. & G. 339, 346; Central Ry. Co. of Venezuela v. Kisch, L. R. 2 H. L. 99, 120; Redgrave v. Hurd, 20 Ch. D. 1. (e) Above, p. 686. (h) Polhill v. Walter, 3 B. & material. Principal, when liable in deceit for a false representation made by his agent. of deceit is founded, not on a false statement in words, but on a frauduleut representation made by conduct (as in the case of active concealment of a defect (i)), it appears that an intention to defraud or cheat the party misled is of the gist of the action, but such intention may be inferred from the facts of the case (). A an action of principal is liable in an action of deceit for a false representation made by his agent, if it were untrue or reckless to the knowledge of the principal and were expressly authorised by him (7); or if it were untrue or reckless to the knowledge of the agent (though not of the principal) and were made either with the principal's express authority or without such authority within the scope of the agent's employment (m). But if the principal were aware of the untruth or recklessness of the statement, and the agent were not, and the representation were made by the agent, without fraud and in the honest belief that it was true, and without the express authority of the principal but within the scope of the agent's employment, it appears that, in order to charge the principal in an action of deceit (n), the party misled must prove some conduct positively fraudulent on the part of the principal; as for instance, that the principal, being aware of the agent's ignorance of the true state of the facts, purposely employed him to transact the business with the object of avoiding any discovery which would or might be made by inquiries put to the (i) Above, p. 686. (k) Selborne, C., Coaks v. Boswell, 11 App. Cas. 232, 236; see the cases cited below, p. 741, n. (p), and cf. above, pp. 682-684. (1) Rolfe, Alderson, BB., Cornfoot v. Fowke, 6 M. & W. 358, 370, 371. (m) Hern v. Nichols, 1 Salk. 289; Parke, B., Cornfoot v. Fowke, 6 M. & W. 358, 373; Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259; Swift v. Winterbotham, L. R. 8 Q. B. 244; Mackay v. Commercial Bank of New Brunswick, L. R. 5 P. C. 394; Swire v. Francis, 3 App. Cas. 106; Houldsworth v. City of Glasgow Bank, 5 App. Cas. 317; George Whitechurch, Ld. v. Cavanagh, 1902, A. C. 117, 140; Giblan v. National, &c. Union, 1903, 2 K. B. 600. (n) See above, p. 737, as to the right of the party misled to rescind a contract so induced. principal himself. Such conduct would, it is considered, amount to an active concealment (0) by the principal, for which he would be personally liable (p). But unless such fraudulent conduct on the part of the principal himself could be shown, it is thought that there would be no cause of action of deceit against him; for he could not be liable for his agent's tort, as the agent did no wrong; nor would the agent's statement amount to a tort committed by the principal himself, if the principal did not expressly authorise it to be made, and did not in any way wrongfully conceal the truth. The principal is not liable for a fraudulent representation by his agent which is not within the scope of the agent's general authority (q), or is made by the agent for his own personal advantage and not for the benefit of the principal (r). The agent is himself liable to the party Agent, where misled in an action of deceit, if he made the false liable. representation knowingly or recklessly: but otherwise not (s). If both principal and agent honestly believed the statement to be true, neither is liable to an action of deceit (t). Of course an action of deceit for a Action of false representation inducing one to enter into a contract deceit may lie against one may be brought, not only against a party to the con- not a party tract or his agent, but also under similar conditions (u) tract. against any other person, who has fraudulently (~) made a false statement with the intent that the party, (0) Above, p. 686. (p) Parke, B., Cornfootv. Fowke, 6 M. & W. 358, 362, 373, 374; above, p. 687, n. (n); Ludgater v. Love, 44 L. T. 694. (q) Barnett v. South London Tramways Co., 18 Q. B. D. 815; George Whitechurch, Ld. v. Cavanagh, 1902, A. C. 117. (r) British Mutual Banking Co. v. Charnwood Forest Ry. Co., 18 Q. B. D. 714; Thorne v. Heard, 1894, 1 Ch. 599, 1895, A. C. 495, 502; George Whitechurch, Ld. v. Cavanagh, 1902, A. C. 117, 141; and see Ruben v. Great Fingall (s) Swift v. Winterbotham, L. R. (t) Parke, B., Cornfoot v. Fowke, (u) Above, pp. 733 sq., 739. to the con Contracts for sale of land are not void disclosure. Except in case of suppression of defects of title. to whom the statement was made, should act upon it or in a manner apparently calculated to induce him to act upon it (y). It has already been pointed out (≈) that contracts for the sale of land are not, as regards defects in the quality able for non- of the land itself or any building thereon, in the class of contracts uberrima fidei; the vendor is under no obligation to disclose any such defect, and if he merely keep silence regarding it, there is no ground for the purchaser to avoid the contract, or even, it is thought, to resist the specific performance thereof. The law is different, however, with respect to the suppression of a defect of title; as a man's title to land must necessarily lie within his own knowledge alone, and is not generally to be ascertained by independent investigation (a). Suppression Thus if a vendor of land suppress the fact that it is subject to restrictive covenants, or disclose some only of such covenants and keep silence as to the rest, that is equivalent to a representation that the land is free from such covenants or is only subject to those mentioned (b); and if this representation induced the purchaser to make the contract, he may rescind it (c). And where a vendor makes a special condition of sale in general terms sufficient to preclude objection to some defect of title, but omits to disclose the defect or to bring it to the purchaser's notice, the purchaser may nevertheless resist the specific performance of the contract in equity, though he may be unable to rescind it (d). of the existence of restrictive covenants. (y) Polhill v. Walter, 3 B. & Ad. 114; Langridge v. Levy, 2 M. & W. 519, 4 M. & W. 337; see Cann v. Willson, 39 Ch. D. 39, overruled on the ground that the representation there made was not fraudulent; Le Lievre v. Gould, 1893, 1 Q. B. 491, 498, 499-501. (z) Above, pp. 681-685. (a) Above, p. 685, n. (a). 641. (c) Flight v. Booth, 1 Bing. N. C. 370; Phillips v. Caldelough, L. R. 4 Q. B. 159; above, pp. 156, 351 and n. (m), 641. (d) Edwards v. Wickwar, L. R. 1 Eq. 68; Heywood v. Mallalieu, 25 Ch. D. 357; Nottingham Patent |