Legal Principles and Key Points
- In the case of Doyle v Olby  2 QB 158, C appealed for more damages to cover the loss after being subject to deceit.
- This company law case is related to fraud and misrepresentation.
Facts of the Case
- C brought an ironmongers’ business based on D’s two false representations: the shop manages all the trade and the amount of the weekly salary bills.
- C sued for false misrepresentation and won but appealed for more damages to cover the entire loss claiming previous damages awarded was only for the breach.
- The main question on appeal was whether the amount of damages awarded was appropriate or should be increased.
- Should the case be sent for a different trial on damages?
- What did the purchaser lose?
Held by Court of Appeal
- Appeal allowed – if the buyer was aware of all the facts then it’s likely there would have been no goodwill payments.
Lord Denning MR
Should the measure of damages for fraudulent misrepresentation be different to the damages for breaching a warranty or a contract?
- Fraud and conspiracy damages should not be assessed like contract breach damages.
- “The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties. In fraud, they are not so limited. The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement.”
- The false statements made convinced C to buy the business even though C was unlikely to do so otherwise.
- “He is entitled to damages for all his loss, subject, of course to giving credit for any benefit that he has received. There is nothing to be taken off in mitigation: for there is nothing more that he could have done to reduce his loss. He did all that he could reasonably be expected to do”.
- C took risks when entering the transaction despite struggling with money. C was ultimately misled by D into buying the business – especially since businesses require lots of time and expenses to manage.
- C is a victim of “deplorable fraud”. On the facts, £5,500 is the right award not £1,500.
- This case heavily references to Clark v. Urquhart  AC 28 where Lord Atkin held measure of damages “[should] be based on the actual damage directly flowing from the fraudulent inducement.”
- Sachs LJ held C should be put back in the position as if the contract had not been formed.
- “Thus, the court must obviously take care not to include sums for consequences which may be due to the plaintiff’s own unreasonable actions, and also not to include results which are too remote – matters which often involve difficult questions of fact and degree. But such difficulties do not alter the duty of the court, which should approach the matter on a broad basis”.