By Stanley Maduabuchi Ofoegbu Esq

INRTODUCTION

Considering the current economic downturn, the struggle for human survival, is now a thing of the fittest. In other words, it is now a case of survival of the fittest. The ordinary man on the street of Gbazango Kubwa Abuja puts it clearer in local parlance thus “man must wack, man must chop” which ordinarily translates to the fact that a man must definitely get something to eat and sustain life. The present economy, no longer puts smiles on the faces of individual. Hence, many now develop different survival strategies. But then, should a man survive at the expense and detriment of another man?

Life is business and business is life. The two are inseparable and hence, interwoven and intertwined.

In today’s business world, deceit among others is now seen as an aspect of business. Most business men and women if not all, are cool and comfortable with it. In fact, many now see the act of deceit as the quickest and easiest way to survival especially, in a country like Nigeria where the government has lost its relevance.

Deceit is a false representation made knowingly or recklessly, expressly or impliedly with the intention that the receiver should rely on it, and which the receiver did actually relied on it to his loss.

By Professor John Salmond, deceit is a tort which consist in the act of making a willfully false statement with the intent that the plaintiff shall act in reliance on it, and with the result that he does so act and suffers harm in consequence. The tort of deceit is known in law of contract as fraudulent misrepresentation. In certain cases, it could pass out as criminal offence where the deceit amounts to a crime such as cheating, obtaining by false pretenses among others.

In Odogwu v Oki (1990) 5 NWLR (pt153) p.721, the court of Appeal held as follows;

“if two people enters into a contract or (business) bracket is mine and if one of them for the purpose of inducing the other to enter with him, states that which is not true, in point of fact which he knew at the time to be untrue, and if upon the false statement the contract is entered into by the other party, then generally, an action at law is open to the latter for damages upon the deceit and there will be a relief to the same party in equity to escape from the contract”

NATURE AND INCIDENCES OF DECEITS

In business world, deceit can come in different forms, styles, shape and manner even though the legal consequence might be the same. Deceit can be by words or by conduct. The law is that, a party should not by his conduct make another party to believe in the existence of things which actually do not exist and which eventually makes the other party to act in a certain way thinking that those things actually do exist. However, it must be noted during contractual and business relation that it is not all conducts of a party that will ground or give rise to an action in deceit when the other party suffers some damage.

While a false statement of facts inducing the representee (the person to whom a representation was made to) to enter into a contract constitutes a misrepresentation, the case will be entirely different if the representor (the person making the representation) was silent while the representee was busy acting on his personal assumptions without making adequate inquiries by way of asking further questions depending however, on the nature of the business relation or agreement. At this, where the representee acts based on his assumptions and suffers damage, he cannot succeed in an action for deceit simply because the representor failed or was silent on those issues unless by law, disclosure was necessary. See Fletcher v Krell (1872)42 L.J Q.B 55, Moriamo Ode v J.F Sick and Co (1939)15 N.L.R.4.

Accordingly, where the representee parts with his money or spend same in acquiring or effecting some services only to discover at the long run that contrary to his personal assumptions and thinking, the reverse was the case, he cannot ask for a refund of money or compensation unless the other party been the representor has by his conduct or words, given him the impression that his assumptions were actually going to be fulfilled or achieved in the process. That alone, will be sufficient inducement.

As simple as it has become, deceiving someone in business has various legal consequences unknown to many who only take their case to God in Prayers only to suffer from the acts of another dubious individual while they are yet to recover from the previous crash. No doubt, the life of an entrepreneur is a life of risk. But then, should an entrepreneur continue to lose his money simply because business involves risk? Should another man feed fat on the money of another man simply because life is all about risk? Business or contract is all about trust and dishonest men who derives pleasure in cheating others, should not be allowed to get away with it.

Requirements for establishing deceits in business world

Where a person during business discussion, gives an incorrect information or makes a representation that is false as if it was indeed actually correct and same was relied by his business partner who acted on same and suffer damages which may include financial loss, delay and others, such a person is entitled to approach a lawyer for briefing. The lawyer when approached, knows the legal steps to take. Should the case end up in a court of law when parties fail to settle amicably, the party who suffered from the said misrepresentation will have to establish the following elements to succeed;

That the defendant made a false representation during business negotiation.
A false representation means a statement or conduct known to be false by the representor but for which the representor intends that the representee accepts as true in a given situation. The representation may be made by words, whether written or oral or by any conduct, calculated to misled the plaintiff who is the representee. Examples of false representation includes;

Where the representor present himself as having relevant licenses to perform a task thereby making the representee to part with his money
Where the representor collects money from the representee to facilitate a work or task on the ground of expertise only to renege on same or ends up with different excuses
Where the representor uses images of completed works of another as his own thereby making the reprentee to part with his money
Where the representor displays goods to attract the representee only to end up supplying or producing substandard goods after making the representee part with his money
Where the reprentor present himself as having a property or being the owner of a property only to end up selling the property of another thereby exposing the buyer who was the representee to loss after collection of money etc.
A defendant may be liable for false representation both where he is the originator of the representation or where he adopts the representation made by another party and passes same to the plaintiff being the representee who now relies on it and suffers damages. See Bradford building society v Boarders (1941) 2 All ER 205 at 211 HL, Smith v Chadwick (1884) 9 AC 187 at 201 HL.

In James v Mid Motors Nig Co Ltd (1978) 2 LRN 187, the plaintiff who was a customer bought a motor vehicle on hire purchase from the defendant motor sales company. The branch manager of the defendant told him that as part of the condition, he must insure the vehicle comprehensively with certain insurance company. The plaintiff complied and paid a premium and the company branch manager issued him a cover note in the name of the insurance company which was fictitious and never in existence. Upon discovery, the plaintiff sued the company for deceit. The court entered damages in favour of the plaintiff for deceit committed by the company through its branch manager.

While it is easier to deceive by fraudulent misrepresentation of facts, it is not in all circumstances that a representation must be made in order to ground an action for deceit. However, the law is that mere silence or non-disclosure is not actionable in the tort of deceit for silent simpliciter does not amount to fraud unless the law makes disclosure mandatory. But in certain circumstances, silence may amount to deceit. Some of those circumstances include;

Partial disclosure or half-truth: Although complete silence about a matter which might have influenced the decision of a representee whether to enter into the contract or not may not necessarily amount to a misrepresentation. However, a partial disclosure will. The law is that where a defendant proceeds to give information on a particular issue, he has a duty to make a full disclosure on it but where he makes a partial disclosure and partial non-disclosure, the half-truth which was previously disclosed will be regarded as a lie and a deceit. Similarly, when a representation is true when made, but a change of facts subsequently occurs to the knowledge of the defendant which alters the situation, the defendant owes a duty to the plaintiff to relate the new development. Deliberate silence of the defendant who is aware of the change of facts will make him liable for deceit. See With v O’Flagan (1936) 1 All ER727. Same also applies where a defendant gives his opinion or statement of an intention which he intends to carryout in future and same which was later discovered to be false.
Active concealment of fact: where a defendant in order to market his product, goods and or services denies the plaintiff being the representee vital information which the plaintiff has requested knowing fully well that upon the revelation of such information, the plaintiff may be forced to turn away from the bargain, the defendant will be guilty of the tort of deceit and liable in damages to the plaintiff.
Where there is a statutory duty to disclose: where a statute imposes a duty to disclose, failure to disclose does not only render such a person liable for the tort of deceit but also, exposes the person to criminal prosecution where the law criminalizes non-disclosure as an offence. Hence, the defendant is exposed to both criminal and civil liability.
That the defendant being the representor knew that the representation was false.
It is not unusual to see people hyping their businesses just to attract customers and clients. Some paint pictures of different degrees including stating things that does not exist just to attract customers and clients as a way of making profit. While many who are victim of these business pranks suffer severe financial loss among others, many who are guilty of this deception are comfortable with it and regard same as a daily business and service system without minding its legal consequences. Unfortunately, many victims are not aware that there is a legal remedy for them.

For a defendant to be liable for deceit in business or contractual relation, the defendant must have made the deceitful statement knowingly or without belief in its truth or recklessly careless without minding whether it be true or not.

That the defendant being the representor intended the plaintiff being the representee to rely on the information.
Where a party is claiming deceit, it is not enough to say that the statement or representation made by the defendant was false or fraudulently made. He must show that the representation was made in such a way that the maker being the defendant actually intended that the plaintiff being the representee will act on it. For that to be established, it is more likely that the plaintiff will to establish the fact that the representation was made pursuant to a business negotiation or in the process of reaching an agreement. Thus, casual statements in form of jokes will not suffice as deceit if the plaintiff is unable to establish the point that there was indeed a basis for its belief.

By intention, the plaintiff is alleging that the misrepresentation was calculated to induce him into accepting it as true. At this point, it is also not necessary to show that the intention was to cause damage to the plaintiff. Similarly, it is also not necessary that the misrepresentation be communicated directly to the plaintiff by the maker. It is sufficient if the maker makes the representation to a third party for it to be transferred to the plaintiff. Hence, an action for deceit may be based on an advertisement such as a radio, television or even a newspaper publication inclusive of social media adverts if the plaintiff is able to show that the representation was addressed to him or a class in which he is a member. See the following cases, Commercial Banking Co Ltd v Brown (1972) 126 CLR 337, Pilmore v Hood (1838)132 ER 1042. Note that where the plaintiff being the representee was aware of the representation, it cannot afford him any relief if he was not influenced by it.

That the plaintiff acted on the false representation to his detriment.
No good product can be produced out of a bad product. When people are deceived into taking a particular line of action, most often, they end up suffering from one loss to another. However, in an action for deceit, the plaintiff must prove that he did not only relied on the representation of the defendant, but that he suffered loss or damage as a result of the reliance. It is immaterial whether the damage suffered is much or minimal. What matters, is whether a person in his position would have done the same thing that is, whether such a person would have relied on the said representation as the plaintiff did. Also, the fact that the plaintiff ought to have made some inquiries with respect to the representation before acting on same is of no moment. See Sule v Aromire (1951) 20 NLR 202, Redgrave Hurd (1881) 20 Ch D 1 at 13.

In summary, where deceit is established, the victim in an action in court will not go uncompensated. Some of the remedies available for him or her includes an award of damages, restitution of any property that may have passed during negotiation, criminal prosecution where the act also constitutes a crime among others. Note that there are also circumstances where the defendant will not be liable for deceit if successfully proved. For instance, where the deceit is spent among others.