This is Part II of my ongoing series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.
Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion
In this part, I shall adopt a functional approach, briefly outlining the position under both systems, before offering some comparative remarks. I use ‘mistake’ as a generic term and do not intend to refer to the doctrine under English law
A) Fraudulent statements
1) English Law
Under English law, one will be able to bring a claim for fraud provided the following conditions are met: (i) a false representation; (ii) knowledge thereof, or a lack of belief in its truth, or recklessness or carelessness as to the truth1. Once fraud is established, one will be able to recover damages under the tort of deceit, sue for recision of the contract, or both((Archer v Brown 1985 QB 401; Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-042])).
2) French Law
Under French law, article 1116 of the Code Civil provides that a contract may be annulled where, as a result of the ‘schemes of one the parties’, it is ‘obvious’ that the other party would not have entered into the contract2 . Such an action may be supplemented with a claim for damages under the general heading of delictual liability provided for in article 13823 .
B) Negligent or innocent statements
1) English Law
Under the Misrepresentation Act 19674, where a person has entered into a contract as a result of a fraudulent misrepresentation, he will be in a position to rescind the contract, claim damages, or both (as long as there is no double recovery)5. Section 2(1) of the Act imposes liability by reference to fraudulent misrepresentation (a ‘fiction of fraud’), the effect of which is to reverse the burden of proof, so that the other party must show they were not negligent in making the statement and had reasonable grounds to hold that belief6. A further cause of action may lie in a claim under tort law7.
As for innocent misrepresentations, where the other party had reasonable grounds to believe that their statement was true, the statute allows for the remedy of recision8. Statutory rescission in both situations is governed by s.2(2) of the Act, which provides the court with the discretion to refuse rescission and award damages in lieu, where it would be ‘equitable’ to do so.
2) French Law
Article 1116 will not come into play for negligent or innocent statements as it requires intent, as evidenced by the use of the term ‘manoeuvres’ (broadly translated as ‘machinations’).
Instead, article 11109, which provides that error “is [a] cause of nullity where it relates to the very substance of the thing which is the object of the agreement”, may be relied upon. The courts have interpreted this as meaning “the essential qualities of the thing, without which the party would not have contracted”10. If the seller knew, or from the circumstances of the sale, should have known the essential objective qualities of the object, then this requirement will be fulfilled. This may also be satisfied by an examination of the purchaser’s intentions, provided the seller was aware that a given quality constituted a determining objective for the purchaser.It should be noted that relief may be denied to a mistaken party whose error may be described as ‘inexcusable11’.
An innocent misrepresentation which leads to an erreur, within the conditions set out above, will only entitle the misled party to ask for the contract to be annulled. By contrast, a party which has been negligently misled, will, in addition to an action for annulment under article 1110, be entitled to seek delictual damages12.
C) Comparative remarks
First, it may be observed that both systems have very similar approaches to fraud13. Provided there is an intent to deceive and knowledge thereof, the other party will be able to claim for damages and obtain recision.
By contrast, there are differences in the way negligently and innocently made misleading statements are treated. It may be said that whereas French law focuses on the consequences on the misled party (provided this brings about an ‘error as to the substance’), English law is solely preoccupied by the actions of the misleading party.
Secondly, as mentioned above, French law will always allow the contract to be annulled once an erreur under article 1110 is established, with the rare exception of ‘inexcusable mistakes’. Under English law, in cases of negligent and innocent misrepresentations, discretion is granted to the court to allow damages in lieu of rescission. A similar outcome may be found in French law if one is unable to establish the existence of an erreur and has to pursue a claim under the heading of delictual responsibility.
I should note that I have deliberately omitted the English doctrine of mistake from this discussion given its extremely narrow scope, as the mistake must be fundamental and it must be shared14.
Overall, this may well be an area where the praesumptio similitudinis of comparative law applies, and, accordingly, broadly similar solutions are reached by different means: mistake under French law and misrepresentation under English law15.
- Derry v Peek (1889) 14 App. Cas. 337; Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 433 [↩]
- French Civil Code, article 1116 [↩]
- French Civil Code, article 1382 [↩]
- Misrepresentation Act 1967: Chapter 7 [↩]
- Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-042] [↩]
- John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [7-03] [↩]
- See: Hedley Byrne & Co Ltd v Heller & Partners Ltd  AC 465 and Esso Petroleum Co Ltd v Mardon  EWCA Civ 4 [↩]
- Misrepresentation Act 1967, section 2(1) [↩]
- French Civil Code, article 1110 [↩]
- PDV Marsh, Comparative contract law : England, France, Germany (Gower 1994) at 122 [↩]
- Ibid. at 124 [↩]
- French Civil Code, article 1383 [↩]
- Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 432-440 [↩]
- John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [15-10], [15-14] [↩]
- Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 507-509, 529-531 [↩]