HB commissioned a third party to provide a report on likely traffic and footfall at a new motorway service station. HB used that report to provide a brochure to attract tenants. The numbers turned out to be nothing like as good and one of the tenants claimed it had been induced to enter into the contract based on a fraudulent misrepresentation. The tenant needed to prove fraud, because the ‘entire agreement’ clause in the contract excluded non-fraudulent misrepresentations.
The High Court refused to grant the tenant’s claim. HB had an honest belief in the statement based on the commissioner report. The judge added that there was no duty to keep the other person continually updated of changes in circumstances; what mattered was the state of affairs when the contract was concluded. None of the statements were false when made; HB believed them to be true and had reasonable grounds for that belief. There was no lack of reasonable belief from HB to continue to rely on the original report, but even if there was it was not a fraudulent misrepresentation if the belief was held honestly. A duty to correct would only arise if HB knew that previous representations that it had made had since become false or was reckless as to whether they were still true.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case does not really change the law in a great way. However, hopefully it will settle a few frayed nerves that there may have been following the High Court’s recent decision to grant a claim that a salesperson’s fraudulent misrepresentation had caused EDS to have potential hundreds of millions of pounds of liability to Sky.’