more than a question of fact in the case. There is no conclusion of law either that the plaintiff availed himself of the means, or that it was his duty to do so; the plaintiff may still show that he was misled by the defendant's representation1. For example: A prospectus of a company in process of formation falsely states that the capital stock is a certain sum, and the plaintiff is induced by this statement to subscribe for shares of stock in the company. The plaintiff might have learned the true state of things by examining the records of the company, which were open to his inspection, but did not make the examination. He is not thereby barred of redress2. The subject may be further illustrated by a quite different sort of case. Every man is presumed to know the contents of a written contract signed by him; but no presumption of knowledge will stand in the way of a charge of misrepresentation or other fraud in regard to the contents of the writing. No doubt it would be imprudent not to read or to require the reading of an instrument before signing or accepting it; indeed, the courts would be apt to turn a deaf ear to a man who sought to get rid of a contract solely on the ground that its terms were not what he supposed them to be. But the case would be different where a plaintiff charged fraud upon the defendant in reading the contract to him, or in stating its terms, or in secretly inserting terms not agreed upon.

Contents

of written instrument: rescission.

The usual course of proceeding in regard to cases of the kind now under consideration is to rescind the contract; but such a course may have become impossible. And whether it be possible or not, it is a well-established rule of law that one who has been induced by fraud to enter into a contract, whether executory or wholly (as by sale and payment) executed, may treat the contract as binding, retain its fruits, and sue for the

1 Central Ry. Co. v. Kisch, L. R. 2 H. L. 99, 120; Smith v. Land and House Corp., 28 Ch. Div. 7; Redgrave v. Hurd, 20 Ch. Div. 1, 13; Reynell v. Sprye, 1 De G. M. & G. 668, 709; Stanley v. McGauran, 11 L. R. Ir. 314; Sankey v. Alexander, Ir. R. 9 Ex. 259, 316.

2 Central Ry. Co. v. Kisch, supra.

3 Foster v. Mackinnon, L. R. 4 C. P. 704; Stanley v. McGauran, 11 L. R. Ir. 314.

4 Stanley v. McGauran, supra.

5 See Clarke v. Dickson, El. B. & E. 148.

fraud by which it was effected1. Hence in the case of a written contract knowingly misread, misstated, or miswritten, the party wronged may (probably) maintain an action of deceit for the damage he may have incurred, while at the same time treating the contract as in itself valid.

But the defendant must have been guilty of fraud, as by knowingly misreading or misstating the instrument. Should he profess to state no more than the effect of a long writing, he could not, it seems, be liable in damages for a mistake; though equity might reform the instrument at the instance of the party injured.

Prudence disarmed by misrepre

The explanation of all this is not far to seek. It is not for a person who admits that he has been guilty of endeavouring to mislead another by misrepresentation, to say to him, when called to account, 'You ought not to have trusted me; you were negligent; you ought sentation. to have made inquiry.' The law requires indeed the exercise of prudence by both parties; but that is all. If prudence on the one side has been disarmed by misrepresentation on the other, the law cannot justly refuse relief. Besides, the case of a plaintiff so situated is quite different from that of a defendant so related to the facts as to be bound to know the truth. In this latter case no one has misled the defendant; in the case under consideration the misrepresentation has, upon the hypothesis, misled the plaintiff.

Partial

The case is not varied in law by the circumstance that the plaintiff may have made some examination on his own behalf; if still he was misled by the false representation examination. of the defendant and prevented from making such examination as otherwise he would have made, he will be entitled, so far, to recover. For example: Representations concerning a hotel about to be sold at auction are made by the seller in printed particulars of sale. The buyer, having seen the statements, sends his agent to look over the premises to see whether it will be advisable to buy. The agent goes

1 Regina v. Saddlers' Co., 10 H. L. Cas. 404, 421; Western Bank v. Addie, L. R. 1 H. L. Sc. 167.

accordingly, and having made examination, makes an unfavourable report; but the purchase is made. The buyer may show that he was induced by the representations of the seller to buy1.

When concealment is

a breach

of duty.

When the defendant induces the plaintiff to abstain from seeking information, mere concealment of material facts may become a breach of duty; and redress will not be refused in such a case merely because a sharp business man might not have been deceived. Nor (according to American authority) is the rule of law different when the defendant suggests examination to the plaintiff, but in such a way as to indicate that the step would be quite unnecessary. For example: The defendant, in selling to the plaintiff property at a distance, suggests to the plaintiff that he go and look at the property, 'as their judgment might not agree, and, if not satisfied, he would pay the plaintiff's expenses, but if satisfied the plaintiff should pay them himself.' This is deemed to justify the plaintiff in acting upon the defendant's representations without examining the property2.

Sale with faults.

Even though a party sell at the risk of the purchaser, 'with all faults,' as he may, he will have no right to practise fraud; and if he should do so he will be liable as for a breach of his legal duty to the purchaser. For example: The defendant sells to the plaintiff a vessel, 'hull, masts, yards, standing and running rigging, with all faults, as they now lie.' He however makes a false statement, that the 'hull is nearly as good as when launched,' and takes means to conceal defects which he knew to exist. This is a breach of duty to the plaintiff3. But the case would be different if the seller, though aware of the defects, should do nothing to conceal them*.

When the parties, by reason of physical or mental infirmity

1 Smith v. Land and House Corporation, 28 Ch. Div. 7.

2 Webster v. Bailey, 31 Michigan, 36.

3 Schneider v. Heath, 3 Campb. 506. See Whitney v. Boardman, 118 Mass. 242, 247.

4 Baglehole v. Walters, 3 Campb. 154 (overruling Mellish v. Motteux, Peake, 156); Pickering v. Dowson, 4 Taunt. 779; Bywater v. Richardson, 1 Ad. & E.

Inequality of parties.

on the one side, or of the fact that the one party is in the occupation or management of the other's business, or has the general custody of his body, do not stand upon an equal footing, the objection to a suit for false representations, that the party to whom they were made was negligent in not making inquiry or examination, has still less force. Examples of this class of cases may be readily found in the case of transactions with aged persons, or with cestuis que trust by trustees, or with wards by guardians1.

§ 5.

INTENTION THAT THE REPRESENTATION SHOULD BE
ACTED UPON

Misrepresentation in regard to

third persons.

In regard to that element of the breach of duty under consideration which requires the plaintiff to prove that the defendant intended his representation to be acted upon, it is to be observed that, while the rule is well settled, its force appears chiefly in those cases in which the deception was practised with reference to a negotiation with a third person, and not with the defendant. In cases of that kind, an instance of which is found in false representations to the plaintiff of the solvency of a third person, it is plain that the transaction with such third person, though shown to have been caused by the defendant's false representation, affords no evidence of an intention in the defendant that the representation should be acted upon by the plaintiff. It would be perfectly consistent with mere evidence that the plaintiff acted upon the defendant's misrepresentation in a transaction with a third person, that the defendant, though he knew the falsity of his representation, did not know, and had no reason to suppose, that the plaintiff would act upon it. The representation might, for all this, have been a mere idle falsehood, such as would not justify any one in acting upon it.

It follows that where a party complains of false representations, whereby he was caused to suffer damage in a

1 See also ante, p. 61.

2 Pasley v. Freeman, 3 T. R. 51.

transaction with some third person, it devolves upon him to give express evidence either that the defendant intended that he should act upon the representation, or the legal equivalent, that the plaintiff was justified in inferring such intention1; and that it is not enough to prove that the misrepresentation was made with knowledge of its falsity".

Bargain between plaintiff and defendant.

When however the effect of the false representation was to bring the plaintiff into a business transaction with the defendant, the case is quite different. Proof of such a fact shows at once the intent of the defendant to induce the plaintiff to act upon the representation; and it follows that no evidence need be offered of an intention to that effect, or of reasonable ground to suppose an intention. The principle appears most frequently in cases of sales; the rule of law being, that if the plaintiff, the purchaser, establish the fact that the defendant, the vendor, knew that his representation was false, it is not necessary for the plaintiff to give further evidence to show that the defendant intended to induce the plaintiff to buy. But the rule is not confined to sales-it is general3.

Intent to injure not necessary.

Indeed, it is not necessary in any case that it should appear that the defendant intended to injure the plaintiff. It has already been stated that a person honestly professing to have authority to act for another is liable as if for fraud for the damages sustained, if he has not the authority. In such cases it is obvious that the representation may have been made for the benefit of the plaintiff. So too in cases in which the defendant has made the misrepresentation with knowledge of its falsity, it is plain that he may really have desired and expected that the plaintiff would derive a benefit from the transaction. The law requires proof of intention (or the equivalent), not because it is supposed

1 See Freeman v. Cooke, 2 Ex. 654; Cornish v. Abington, 4 H. & N. 549. 2 See Pasley v. Freeman, 3 T. R. 51.

3 See Foster v. Charles, 6 Bing. 396; s. c. 7 Bing. 105; Polhill v. Walter, 3 B. & Ad. 114.

4 Ante, p. 65.

5 See Polhill v. Walter, 3 B. & Ad. 114.