The tort of deceit, also known as "fraud", dates in its modern development from Pasley v. Freeman. Here the defendant said that a third party was creditworthy to the claimant, knowing he was broke. The claimant loaned the third party money and lost it. He sued the defendant successfully.

Deceit occurs when a person makes a factual misrepresentation, knowing that it is false (or having no belief in its truth and being reckless as to whether it is true) and intending it to be relied on by the recipient, and the recipient acts to his or her detriment in reliance on it.

The leading case in English law is Derry v. Peek

Derry v. Peek

Derry v Peek LR 14 App Cas 337 is a case in English law on the tort of deceit. The House of Lords determined there was no general duty to use ‘care and skill’ in the context of issuing a prospectus to refrain from making misstatements.-Facts:...

(1888) LR 14 App Cas 337.

Relationship with negligence

Derry v. Peek was decided before the development of the law on negligent misstatement. In Hedley Byrne & Co Ltd v. Heller & Partners Ltd it was decided that people who make statements which they ought to have known were untrue because they were negligent, can in some circumstances, to restricted groups of claimants be liable to make compensation for any loss flowing. This falls under the so called "voluntary assumption of responsibility" test.

In Bradford Equitable B S. v Borders it was held that in addition the maker of the statement must have intended for the claimant to have relied upon the statement.

The main difference between suing in deceit and in negligence is the caps on remoteness

Remoteness

Remoteness in English law is a set of rules in both tort and contract, which limits the amount of compensatory damages for a wrong.In negligence, the test of causation not only requires that the defendant was the cause in fact, but also requires that the loss or damage sustained by the claimant was...

 of damages. In deceit, to mark the law's disapproval of fraud, the defendant is liable for all losses flowing directly from the tort, whether they were foreseeable or not. In Doyle v. Olby (Ironmongers) Ltd Lord Denning MR remarked, "it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen." So where there is a sudden downturn in the property market, a person guilty of deceitful misrepresentation is liable for all the claimants losses, even if they have been increased by such an unanticipated event. This is subject to a duty to mitigate the potential losses.

Also, contributory negligence

Contributory negligence

Contributory negligence in common-law jurisdictions is defense to a claim based on negligence, an action in tort. It applies to cases where a plaintiff/claimant has, through his own negligence, contributed to the harm he suffered...

is no defence in an action for deceit. Moreover under the Limitation Act 1980 s. 32(1)(a) the time clock in which to sue does not start running until the claimant discovers the deceit or could with reasonable diligence have discovered it.

However, despite the more claimant friendly rules, proving deceit is far more difficult than proving negligence, and alleged dishonesty is a far riskier course of action. Under the English bar rules, lawyers can be subject to sanctions for alleging fraud when there is no basis on which to do so.