We frequently receive enquiries from clients who believe they were misrepresented into entering contracts they would never otherwise have agreed to. These situations arise across a wide range of transactions – investment products, insurance arrangements, commercial agreements and property dealings – often involving trusted advisers or long-standing professional relationships.
A recent and significant Privy Council decision, Credit Suisse Life (Bermuda) Ltd v Ivanishvili and others , provides welcome clarity on the law of fraudulent misrepresentation. The judgment cuts through a number of misconceptions and confirms that the courts will focus on commercial reality rather than artificial technical hurdles.
The legal foundation: fraudulent misrepresentation
Fraudulent misrepresentation (or deceit) requires four core elements:
- A representation of fact, whether express or implied
- Falsity
- Dishonesty – knowledge of falsity, lack of belief in truth, or recklessness
- Inducement – the representation caused the claimant to enter the contract and suffer loss
While these principles are long-established, Ivanishvili is particularly important in clarifying how they are applied in practice.
No need for conscious awareness
One of the most powerful aspects of the decision is the Privy Council’s rejection of the argument that a claimant must show conscious awareness of the misrepresentation at the time it was made.
The Court confirmed that this is not a legal requirement. What matters is whether the representation operated on the claimant’s mind and induced the transaction – even if the claimant could not later identify or articulate it as a distinct statement.
As the Privy Council made clear, it is a mistake to elevate evidential issues into rigid legal requirements. In many real-world transactions, particularly complex financial or advisory arrangements, representations are absorbed implicitly rather than consciously analysed.
Implied representations carry real weight
The decision also underlines that fraudulent misrepresentation is not limited to express statements. Implied representations – conveyed by conduct, structure, or the very nature of a proposal – can be just as powerful.
In Ivanishvili, the act of proposing an investment structure carried an implied representation that the assets would not be handled dishonestly. That implication was false, known to be false, and relied upon. That was enough.
This is especially relevant where advisers, intermediaries or institutions present products within an established relationship of trust. The law recognises that trust itself can be the mechanism by which misrepresentation operates.
Reliance: substance over form
The Privy Council reaffirmed that a claimant does not need to prove that the misrepresentation was the sole or dominant reason for entering into the contract. It is sufficient that it was a real and effective cause.
Equally important, acting on an “unconscious assumption” does not defeat a claim. The law is concerned with causation in substance, not artificial distinctions about how beliefs are formed.
Why this decision matters
For claimants, this judgment is a strong signal that the courts will not allow dishonest parties to escape liability through technical arguments divorced from commercial reality.
For defendants, it is a clear warning that misrepresentation claims will be assessed by reference to the true effect of representations, not by narrow argument about wording.
Our approach
Fraudulent misrepresentation claims are fact-sensitive and often hard-fought. Early strategic advice is critical – both in assessing prospects and in framing the claim in a way that reflects how the courts now approach inducement and reliance.
This decision sends a clear message: where a party is dishonestly induced into a contract, the law provides strong remedies. The focus is on what really happened, not technical obstacles.
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