34 FRAUD MISREPRESENTATION. 



third parties have onerously acquired rights under a contract 

 induced by fraud, the remedy of the party defrauded is 

 limited to damages ; he cannot reduce the contract. (a) And 

 where the fraud is merely incidental to the contract, and not 

 strictly speaking dans causam contractui, the injured party 

 cannot rescind the contract, but he has a claim of damages ; 

 and even in that case the fraud must be material. (6) 



When, however, the fraud is that of a third party of which 

 the contracting party has no knowledge and derives no bene- 

 fit, the remedy can only be obtained against such third 

 party.(c) Thus a horse dealer who had entered into a plot 

 with others to sell an unsound horse as sound, was found liable 

 in relief to the purchaser, although the sale was not made by 

 him but by a coadjutor. (r?) But the fraud of an agent binds 

 his principal if the fraudulent act be within the scope of his 

 authority, or for his principal's benefit. (e) 



31. Misrepresentation. — When misrepresentations of any 

 material facts are wilfully made, either to one who is to act 

 upon it, or to a third (/) party, with that end in view, with 

 the intent that they shall be acted on, either when known 

 by the party giving them to be untrue, or recklessly given 

 by him with an utter disregard as to their truth or falsity, 

 they are evidence from which fraud is to be inferred, and 

 are a good ground for annulling a bargain or claiming 

 damages. (</) Thus, where a party advertised a horse for sale 

 by auction as " a remarkable good hack, and parted with for 

 no fault further than that the owner is going abroad and has 

 no further occasion for him," and a similar statement was 



(a) B.C. i. 262 ; B. Pr. 13 A. 



(b) B. Pr. 1.3 ; B.C. i. 262; Attivood v. SmaU, 1838, 6 CI. and Fin. 232; Ehren- 

 backer <£• Co. v. Kennedy, 1874, 1 E,. 1131, relevancy of averment of fraud. 



(c) B. Pr. 13. 



(d) Hlbbert v. Bruce, 1822, 1 S. 422. 



(c) B. Pr. 224 B., and authorities there cited, § 66. 



{/) Rank. Ersk. Pr. iii. 1, 6 A ; Attivood v. Small, cit. 



[f]) Anson Contracts, 151 ; Peek v. Gurney, 1873, L.R. 6 H.L. 577 ; Barry v. 

 Croshcy, 1861, 2 J. and H. 1 ; Derry v. Peek, 1889, 14 App. Ca. 337 ; Wheelton v. 

 Ilardisty, 1858, 27 L.J., Q.B. 241. See pp. 51 and 52, infra. 



