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S Pearson & Son Ltd v Dublin Corporation [1907] AC 351

Contract law – Fraudulent representation

Facts

The defendant provided the plaintiff with plans, drawings and specifications for the construction of work on a sewage system. The plaintiff agreed to undertake the work on the information that had been provided by the defendant. The plaintiff subsequently incurred further expense on the basis that the information in the plans was false, but continued to carry out the contract and sought damages from the defendant upon the completion of the work. D claimed that they had protection from liability as a result of a clause in the contract which stated that the representation in the plans must not be relied on and the plaintiff must determine the facts for themselves. The Court of Appeal in Ireland found in favour of the defendant and the plaintiff had appealed this decision.

Issue

The question for the court, in this case, was to consider whether the plaintiff was required to determine their own facts regarding the project or whether the defendant was restricted from relying upon a limitation clause that they had inserted into the contract. An important issue for the court to establish was whether the statement that was made by the defendant in the plans was fraudulent or simply inaccurate.

Held

The court found in favour of the plaintiff. It did so on the basis that the defendant could not limit or avoid their liability for their own fraudulent statement by way of a clause in the contract. The decision from the Court of Appeal in Ireland was reversed and the original trial decision was restored.


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