Lloyd's Maritime and Commercial Law Quarterly
RATIONALISING “FULL COMPENSATION” AS THE REMEDIAL STRATEGY FOR THE TORT OF DECEIT
Moshood Abdussalam *
This article contributes to the theorisation of the tort of deceit through a remedial lens. It does so by analysing and justifying the peculiar (and rather pro-plaintiff) rules that shape the two causative criteria that form the backdrop for the award of compensatory damages for the tort of deceit. These are the benchmarks for transaction causation and loss causation. The article’s thesis is the argument that damages assessment for the tort of deceit functions, in substance, to mimic a judicial reordering of transactions and outcomes resulting from the fraudulent bypassing of the deliberative faculties of innocent representees. The consequence is that the wrongdoer is held responsible for all the adverse consequences reasonably connected with the victim’s change of position in reliance on the representor’s deception.
I. INTRODUCTION
The central aim of this article is to rationalise and justify the common law’s adoption of full compensation as its remedial strategy in dealing with deceit. In other words, this article seeks to rationalise why the remedial aspiration of “putting a victim in the position they would have been had a wrong not been committed against them” is substantially different in the tort of deceit compared with (most) other torts. Some scholars and observers have criticised the full compensation strategy as representing a departure from private law’s traditional deployment of the just compensation strategy (under the aegis of the so-called compensation principle).1 It is hoped that this article will, through a remedial lens, contribute to the theorisation of the tort of deceit—an economically important species of tort that has yet to receive the quality of attention it deserves from private law scholars. As Carty rightly observes about the tort, it is “largely overshadowed in importance by liability for negligent misstatement and by state regulation of trade misdescriptions”.2
The remedial strategy of full compensation hinges largely on relaxing two causal criteria essential to assessing damages. These causative criteria may be labelled transaction causation and loss causation, borrowing from American terminology.3 In the English
* Senior Lecturer in Law, University of Otago.
1. Eg, J Poole and J Devenney, “Reforming Damages for Misrepresentation: The Case for Coherent Aims and Principles” [2007] JBL 269; J Marks, “Loss of Profits in Damages for Deceit” (1992) 108 LQR 386.
2. H Carty, An Analysis of the Economic Torts (Oxford, 2010), p.185.
3. MB Fox, “After Dura: Causation in Fraud-on-the-Market Actions” (2006) 31 J of Corporation Law 829, 831.
full compensation for deceit
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