Law of misrepresentation - latest developments on fraudulent misrepresentation in Guernsey
This briefing looks at how misrepresentation claims should be pleaded with particular care under Guernsey law and careful consideration should be given before pursuing such actions.
Even for Guernsey lawyers, it is tempting to assume that English principles will be so persuasive before the Guernsey court as to apply identically in practice. However, it is clear that certain areas of Guernsey law differ materially from English law, such as the law of property. So far as contact law is concerned, it is often described as a great mash-up of differing sources, sometimes mirroring English law, but on other occasions (to varying extents, depending on the area of contract law in question) tending towards other jurisprudential sources, including the French Civil Code.
Guernsey law has its origins in Norman customary law but, so far as the law of contact is concerned, the law is reliably sourced in a Treatise on the Law of Obligations or Contracts, authored by Robert Joseph Pothier, published in 1761. This was recently confirmed in Evans v Guernsey Renovations Buildings Limited [2024] GRC001. Accordingly, in order to make a binding contract under Guernsey law four elements are required:
- capacity – the persons have the legal capacity to enter into the contract;
- consent – must be apparent and there must not be any matter that vitiates the apparent consent such as fraud or misrepresentation;
- object – relates to the subject matter of the contract and this must be clear. It is in respect of the subject and the intention of the agreement and whether it is ascertainable with sufficient certainty; and
- cause – the reason for the obligation to be performed.
Due to these roots, greater uncertainty exists with respect to the boundaries and operative principles of certain areas of Guernsey contract law. For example, there is continuing uncertainty in Guernsey as to whether specific performance is available as a contractual remedy. It is, however, always important to consider substance over form in analysing the appliable principles in Guernsey law. It is widely said that Guernsey contract law is embodied in the maxim "la convention fait la loi des parties"; a customary law maxim meaning that an agreement between the parties creates legal obligations between them and that parties are, in principle, free to contract on whatever basis they see fit. However, when it comes to the rules of contractual interpretation, including as to the implication of terms in fact or in law, Guernsey law routinely applies the tests found in English law.
The law of misrepresentation
In the recent Jersey case of Hong Kong Foods Limited & Anr v Robin Hood Curry Limited & Anr, Sir Michael Birt, Commissioner, addressed the question of whether Jersey law broadly followed English common law principles in relation to misrepresentation or whether innocent misrepresentation is a type of vice du consentement (a defect of consent) the effect of which undermines the legal consent of the contracting party to whom the statement was made such that the contract was never validly formed. Ultimately, the Commissioner favoured a more modern solution, holding that an outcome whereby a contract induced by innocent misrepresentation is void ab initio was undesirable and not required by precedent. Misrepresentation should, therefore, be regarded as a standalone principle of Jersey contract law rather than "seeking to shoehorn it into the structure of a vice du consentement".
There has been no equivalent clarification of the law of misrepresentation as a matter of Guernsey law. That said, Jersey authorities are persuasive in Guernsey; and English law authorities are frequently cited in Guernsey and are also highly persuasive. The Royal Court, in a recent case in Guernsey, W. Landl and Others v S. Hogg and Others [2024] GCA052, addressing certain aspects of the law of misrepresentation and negligent misstatement, implicitly adopted the assumption that English law principles apply.
So far as the law of misrepresentation is concerned, it is also important to note that there is no equivalent in Guernsey to the Misrepresentation Act 1967. English case law has, of course, evolved in light of the Misrepresentation Act whereas Guernsey law, necessarily, cannot have followed that same evolutionary path as a result of the absence of an equivalent statutory framework in Guernsey.
It follows, therefore, that whilst the Guernsey courts are likely to apply the general English common law principles of misrepresentation, there is some uncertainty as to precisely how these issues will be approached. The Guernsey courts may be reluctant to follow all the common law rules prior to the Misrepresentation Act, which were widely regarded as uncertain and confused as to certain distinctions in operation. For example, there was criticism of the emphasis the law placed on whether the representation was or was not incorporated into the contract as a term. Where the representation was not incorporated, the remedy of rescission might have been available; however, where the representation was incorporated, a breach of the term might justify rescission, but the consequences would be dependent upon the nature of the term breached.
Where the Guernsey courts consider a path taken by English law to be unclear, unprincipled or otherwise unsatisfactory, Guernsey law is free to take its own path where preferable to do so.
Conscious awareness and fraudulent misrepresentation
Quite how the Guernsey courts may deal with the latest developments from other jurisdictions also remains to be seen.
The Board of the Privy Council has recently given judgment in Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2025] UKPC 53 on the law of misrepresentation in the Bahamas. A claim for fraudulent misrepresentation is based on the principle that a person who causes another person to suffer loss by deceiving them is liable to compensate that person for the loss. It has long been a requirement that an actionable fraudulent misrepresentation requires the representee to believe that the representation is true. However, in a unanimous judgment delivered by Lord Leggatt, the Privy Council clarified that it is not a legal requirement of a claim for fraudulent misrepresentation that the plaintiff be aware of the representation on which the claim is based.
In Ivanishvili, the Court of Appeal of Bermuda had held, in keeping with a number of other authorities, that there is a legal requirement that a plaintiff be aware of a misrepresentation and understood it to have been made at the time that he or she acted in reliance upon it. The Privy Council, however, concluded that there is no such requirement under the laws of England and Wales, and Bermuda.
The Privy Council referred to examples of cases where a plaintiff was deceived and suffered loss as a result of acting on that false belief without having conscious awareness or understanding of the representation being made. For example, a customer in a restaurant implicitly represents to a waiter that she will pay for his meal. In that situation, it is unrealistic to suppose that the waiter was consciously aware of the representation made by the customer since she does not stop to think that, by placing an order, the customer is representing that she has the means and intention to pay for the meal before leaving. The waiter just assumes this to be the case. However, the Privy Council's decision does not alter the fact that it is still necessary for a plaintiff to establish that the misrepresentation had, in fact, caused the plaintiff to act as he did (even though it did not have to be the sole operative cause).
Whilst it likely that the underlying rationale of the Privy Council's decision will be persuasive before the Guernsey courts, the wider approach of the Guernsey courts to the law of misrepresentation falls to be clarified in due course.
Pursuing misrepresentation claims in Guernsey
We are involved with a number of misrepresentation claims currently being pursued in Guernsey that are likely to test the applicable principles and bring greater clarity to this area of the law.
Misrepresentation claims should be pleaded with particular care under Guernsey law and careful consideration should be given before pursuing such actions. It will be important for a plaintiff to clearly plead representations implied from words or conduct, keeping the averments as simple and clear as possible. From a defendant's perspective, there is likely to be scope to exploit the relative uncertainty under Guernsey law in order to resist a plaintiff's action and the relief claimed.
Frequently asked questions
常见问题解答
1. How does Guernsey law on misrepresentation differ from English law?
Although English law is often persuasive in Guernsey, the two systems are not identical and can diverge significantly in certain areas. Guernsey contract law has its roots in the writings of Pothier, and there is no equivalent in Guernsey to the Misrepresentation Act 1967. As a result, more recent English developments are not directly analogous, creating areas of uncertainty and scope for Guernsey courts to take a distinct approach.
2. How do Guernsey courts currently approach English misrepresentation principles?
Despite the differences with English law, Guernsey courts frequently refer to English common law principles when addressing misrepresentation, and recent cases suggest that this approach is often assumed in practice. However, the Guernsey courts retain flexibility and may decline to follow English authorities where they are considered unclear, unprincipled, or unsuitable for Guernsey law.
3. Does fraudulent misrepresentation in Guernsey require conscious awareness?
Recent Privy Council authority suggests that fraudulent misrepresentation does not require the claimant to have been consciously aware of the misrepresentation at the time they relied on it. What matters is whether the false representation caused the claimant to act and suffer loss. Whilst this authority is not yet confirmed as applying to Guernsey law, it is likely to be followed.
4. What should parties consider when bringing or defending a misrepresentation claim in Guernsey?
Misrepresentation claims in Guernsey should be pleaded with particular care. Plaintiffs should clearly identify the representations relied upon, including those implied by words or conduct, and how those representations caused loss. Defendants, meanwhile, may be able to rely on existing legal uncertainty to challenge liability or the scope of any remedies claimed.
