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Fraudulent Misrepresentation UK: Claims & Remedies

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Part ofCommercial Disputes

Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
Commercial deals depend on honesty. When one party lies to get another to sign, the consequences can be financially damaging and legally serious. Fraudulent misrepresentation sits at the sharper end of contract disputes, going beyond a simple mistake or optimistic sales talk into deliberate or reckless dishonesty. If you run a business in England or Wales, knowing how to recognise it, gather the right evidence, and understand the remedies available can save you a great deal of money and stress. This guide walks through what fraudulent misrepresentation actually means in practice, the tests the courts apply, the kinds of situations that tend to give rise to claims, and the options open to you if you think you have been misled into a contract. It is written to help business owners, directors, and managers get their bearings before taking the next step.

Overview

Fraudulent misrepresentation is a particular kind of false statement made during the formation of a contract. The leading case of Derry v Peek (1889) set the test: a statement is fraudulent where the person making it knows it is untrue, has no honest belief that it is true, or is reckless as to whether it is true or false.

It is not enough that the statement turned out to be wrong. There must be dishonesty behind it. The statement also has to be one of fact or present intention, not mere opinion or sales puffery, and it must have played a real part in the other side's decision to enter the contract.

In a business context this could involve false figures in accounts shown to a buyer, untrue statements about the performance of a product, or assurances about contracts, customers, or assets that the seller knows do not stack up. Where fraud is established, the consequences are more serious than for innocent or negligent misrepresentation, both in terms of remedies and reputation.

Claims are usually brought in the civil courts, though related conduct can also attract criminal attention under the Fraud Act 2006.

Key steps

  1. Identify the statement and who made it. Pin down exactly what was said or written, by whom, and when. Verbal assurances in meetings, figures in a pitch deck, emails, brochures, or warranties in a draft contract can all qualify. The more precise you can be about the wording and context, the stronger the foundation for any claim. 2. Gather your evidence. Pull together every document that touches on the statement and your reliance on it. This can include emails, meeting notes, marketing materials, financial information you were given, and records of your own internal decisions. Keep originals where possible and make a clear chronology, because fraud claims live or die on the paper trail. 3. Test the statement against the legal elements. Consider whether the statement was untrue when made, whether the other party knew it was false or was reckless about its truth, whether you actually relied on it in deciding to contract, and whether you have suffered loss as a result. If any of these elements is weak, a negligent or innocent misrepresentation claim may still be open to you. 4. Consider your options and timing. You may want to rescind the contract, claim damages, or both. Acting quickly matters, because delay, affirming the contract after discovering the truth, or continuing to take benefits under it can cut off the right to rescind. Limitation periods also apply, so the clock is already running from the point the fraud could reasonably have been discovered. 5. Take tailored guidance before acting. Fraud is a serious allegation and pleading it requires care. Before sending a letter of claim, threatening court action, or terminating a contract, it is sensible to talk through the facts with someone experienced in commercial disputes so that your next move is the right one for your specific situation.

Common questions

If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £89.

Common questions

Q How is fraudulent misrepresentation different from negligent or innocent misrepresentation?
The key difference is the state of mind of the person making the statement. Fraudulent misrepresentation requires dishonesty, meaning the maker knew the statement was false or was reckless about its truth. Negligent misrepresentation involves a careless false statement, while innocent misrepresentation covers honest mistakes. The remedies and damages available differ significantly, with fraud attracting the widest measure of loss.
Q Does sales talk or marketing puffery count as misrepresentation?
Generally no. Vague promotional language such as 'best in class' or 'market leading' is usually treated as opinion rather than a statement of fact, and the courts will not hold a seller to it. The line is crossed when specific factual claims are made, for example stated turnover figures, customer numbers, or product capabilities, and those claims are untrue. Context and precision matter.
Q What remedies can the court award if fraudulent misrepresentation is proved?
Two main remedies are available. Rescission unwinds the contract and tries to put both parties back in their original position. Damages aim to compensate for losses flowing directly from the fraud, and in fraud cases this measure is typically broader than in negligence. Courts can also award consequential losses. The right remedy depends on what you want to achieve and whether rescission is still possible.
Q How long do I have to bring a claim?
Claims in fraud are subject to the Limitation Act 1980. In broad terms, time often runs from when the claimant discovered the fraud, or could with reasonable diligence have done so, rather than from the date of the contract itself. Because the rules can be technical and fact-specific, it is important to take guidance early rather than assume you still have time.
Q Can a company be held liable, or only the individual who lied?
Both can potentially be on the hook. A company can be liable for fraudulent statements made by its directors, officers, or employees acting within the scope of their role. The individual making the statement may also face personal liability, and in serious cases criminal exposure under the Fraud Act 2006. Claimants sometimes sue the company and the individual together.
Q Does an 'entire agreement' clause prevent a fraud claim?
Entire agreement and non-reliance clauses can limit claims for innocent or negligent misrepresentation, but they cannot be used to exclude liability for fraud. Public policy does not allow a party to contract out of their own dishonesty. That said, such clauses can still make claims harder to run in practice, so the drafting of the contract you signed will be an important part of any assessment.
Q Should I report suspected fraud to the police or Action Fraud?
You can do both: pursue a civil claim to recover your losses and report the matter to Action Fraud, which is the national reporting centre for fraud in England, Wales, and Northern Ireland. Civil and criminal processes run separately and serve different purposes. Reporting does not guarantee a criminal investigation, but it creates a record and may contribute to wider enforcement action.
If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £89.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.