The representation must be made with the knowledge of its falsity

A false statement is not actionable in deceit as distinct from in negligence unless it is willfully false. So in order to make the defendant liable the representation must be made with the knowledge that it is false or without believing in its truth.

This was established by the House of Lords in Derry v. Peak140_{. In this case the directors of a tramway} company which had authority to use steam power with the consent of the board of trade, believing honestly but unreasonably that this consent would be given as a matter of course issued a prospectus in which it is stated that they had the right to use steam power without reference to any condition. In reliance to this statement plaintiff took shares in the company. The promoters were held not liable in damages on the ground that there was no proof that the error was fraudulent.

This rule in Derry v. Peak is subject to 8 exceptions:

1. Liability under Hedley Burne v. Heller141_{. In this case the court held that there was no difference} between physical injury and financial loss, if it caused by a negligence. So a representation which caused some financial loss due to the defendants negligence where considered as a false representation.

140 _{(1889) 14 AC 337} 141 _{1964 AC 465}

2. Physical harm: the rule in Derry v. Peak does not apply to cases in which there is a physical harm caused to the plaintiff’s person or property.

3. If there is a contractual duty to take care in making statements the rule in Derry v. Peak is excluded. 4. Fiduciary relationship

5. Warranty of authority: every person who purports to act as agent of another is deemed in law to have entered into an implied contract of warranty of authority with any person who contracts or otherwise deals with him in reliance on his authority.

6. Estoppels: the rule of estoppels by representation is not affected by Derry v. Peak and may in certain cases so operate as to impose liability in damages for a false statement which is not fraudulent.

7. Statutory duty

8. Principal’s liability for fraud of agent: it was established in the case London County Freehold Properties v. Berkely Property co. ltd142 _case.

It must be made with the intention that it should be acted on by plaintiff or by a class person which includes the plaintiff in the manner which resulted in damage to him.

It must be proved that the plaintiff has acted upon the false statement has sustained damage by so doing. DETINUE

Detinue consists in withholding the immediate possession of goods from one who is entitled to it. Detinue or detention comes from the Latin root ‘detinet’. It is the adverse withholding of the chattels of another. When the defendant is wrongfully detaining the goods belonging to the plaintiff and refuses to deliver the same on lawful demands the plaintiff can recover the same by bringing an action for detinue. It is thus an action for the recovery of goods unlawfully detained by the defendant.

In England by the passing of Torts (Interference with Goods) Act, 1977 detinue has been abolished. In India although detinue as such has not been mentioned as a wrong but similar action for recovery of specific movable property has been recognized by the Specific Relief Act, 1963 (Sec. 7,8)

See

Banshi v. Govardhan AIR 1976 MP 125

CONVERSION

Conversion is said to have been committed where a person intermeddles with the property of another. In other words a person who treats goods as if they were his when they are not, is liable to be sued in conversion. According to Salmond conversion is an act of willful interference without lawful justification with any chattel in a manner inconsistent with the right of another whereby that other is deprived of the use and possession of it. The expression willful interference in the definition means that the element of intention is necessary in constituting the tort of conversion.

Conversion may be committed in many ways: a) Conversion by taking goods b) Conversion by wrongful detention of goods c) By wrongful delivery of goods d) By wrongful disposition of goods i.e. transfer of ownership to another e) By wrongful destruction f) By miscellaneous forms of conversion

A person is guilty of conversion who in any other way than those mentioned above causes the loss of chattel by any act of willful interference without lawful justification. In tort of conversion, for establishing liability it is not necessary that to show that the defendant has in physical possession of the goods in any time.

Defences

Jus tertti: the defendant can plead that some third party has superior title to that of plaintiff. This defence is subject to 3 exceptions: a) where the plaintiff was in possession of the goods at the time of coversion,

the defendant cannot plead jus tertti b) where the plaintiff was not in actual possession of goods at the time of conversion but only a right to possess, in such case the defendant can plead jus tertti c) a bailey is estopped from setting up the title of an owner who does not authorize him to make the claim on his behalf. Remedies

Redelivery Damages