What is the main issue in Edgington v. Fitzmaurice?

Whether the directors were liable for deceit and fraud when the prospectus described how the money would be used.

What rule about deceit does the case highlight?

A false statement of fact, known to be false or made recklessly, must have caused or materially influenced the plaintiff’s action.

What were the facts in short?

The plaintiff invested £1500 after reading a prospectus about how funds would be used for business expansions like buildings and transport.

What did the court decide?

The court noted an implied obligation but found no dishonest making of the statement about spending the money.

Why does the case matter to students?

It teaches how deceit requires proof of falsity, knowledge or recklessness, and a link between the statement and the plaintiff’s decision.

Edgington v. Fitzmaurice

Edgington v. Fitzmaurice (1885)

A clean, student-first explainer in easy English: quick points, rules, timeline, arguments, judgment, and exam takeaways.

Court of Appeal 1885 Contract Law 29 Ch. 459 5 min read

By Gulzar Hashmi • India • Published: 25 Oct 2025

Quick Summary

This case is about an investor who put £1500 into a society after reading its prospectus. The prospectus described how the raised money would be used—on buildings, horses, vans, and developing a direct fish supply. The question was: did the directors commit deceit by making statements that were false or reckless, and did those statements make the investor act?

Issue: Are the defendants liable for deceit and fraud under Contract Law?
Rule: False statement of fact + knowledge/recklessness + causation (sole or material cause).
Held: Court noted an implied obligation but did not find dishonest making of the spending statement.

Issues

Did the prospectus contain a false statement of fact?
If false, did the defendants know it was false or were they reckless about its truth?
Did the statement cause, or materially contribute to, the plaintiff’s investment?

Rules

To prove deceit:

False Fact: There must be a statement of fact which is false.
Knowledge/Recklessness: The defendant knew it was false, or spoke without caring if it was true or false.
Causation: The false statement was the sole cause or a material cause of the plaintiff’s action.

Facts (Timeline)

Anchor

The society’s directors issued a prospectus to raise funds.
The prospectus said they had a valuable property; a half-yearly payment of £500 was due on a £21,500 mortgage.
Planned use of funds: finish building works, buy horses and vans, and expand a cheap fish supply system.
Relying on this, the plaintiff invested £1500 for a long-term, fixed-interest security.

Case timeline visual for Edgington v. Fitzmaurice

Arguments

Appellant (Plaintiff)

The prospectus misstated intended use of funds.
Such misstatements were material and induced the investment.
Therefore, deceit is made out under the rule of false fact, knowledge/recklessness, and causation.

Respondent (Defendants)

Any obligation in the prospectus was implied, not a dishonest promise.
There was no knowing falsehood or reckless disregard for truth.
The plaintiff’s decision was not solely due to the statement, or not materially so.

Judgment

Permalink

The court observed that while the prospectus carried an implied obligation, the statement about how the money would be spent was not shown to be made dishonestly. On the record presented, the defendants’ statement on spending was found not to be a fraudulent misstatement.

Finding: No dishonest intent proved regarding the use-of-funds statement.
Impact: Deceit was not established on the pleaded facts as to dishonesty.

Ratio

For deceit, the plaintiff must prove: (1) a false statement of fact; (2) knowledge of falsity or reckless disregard; and (3) causation—either sole cause or material contribution to the plaintiff’s act. Without proof of dishonest intent, deceit fails.

Why It Matters

Shows the strict elements of deceit: fact, fault, and link to action.
Reminds that not every broken plan equals fraud; dishonesty must be proved.
Useful when reading prospectuses and business promises in contract settings.

Key Takeaways

Element Check: Fact → Knowledge/Recklessness → Causation.
Implied vs. Dishonest: An implied obligation is not automatically deceit.
Inducement: Statement must move the plaintiff to act, at least in a material way.

Exam Tip

When writing answers, prove each element separately and show how the facts meet (or fail) each element.

Mnemonic + 3-Step Hook

Mnemonic: F-K-C — Fact • Knowledge • Causation

Find a false fact.
Knowledge or reckless disregard.
Cause: sole or material inducement.

IRAC Outline

Issue

Are the defendants liable for deceit based on statements about how the raised money would be used?

Rule

False statement of fact; knowledge/recklessness; causation—sole or material inducement.

Application

The prospectus outlined use-of-funds. The court did not see dishonest intent proved regarding that statement.

Conclusion

No deceit established on the facts presented about the spending statement.

Glossary

Deceit: A tort where a person relies on a knowingly false or reckless statement and suffers loss.
Prospectus: A fundraising document describing a project or investment offer.
Inducement: When a statement leads or helps lead someone to act.