What is the main rule from Peek v. Gurney?

Only the intended recipients of the prospectus—the original applicants—can sue for misrepresentation in the prospectus.

Why couldn’t Peek recover damages?

Peek bought shares later in the market. The prospectus was not addressed to him, so he was not the representee.

How does this relate to Indian law?

It supports Sections 17 and 18 of the Indian Contract Act on fraud and misrepresentation, and aligns with liability ideas under Section 447 of the Companies Act, 2013.

Does every reader of a prospectus get a right to sue?

No. The right is limited to those to whom the statement was directed—the first applicants who relied on it.

What is the simple takeaway for students?

Prospectus lies help only those it was meant to persuade at the start; later buyers on the market cannot claim on that prospectus.

Peek v. Gurney

Peek v. Gurney (1873) LR 6 HL 377

Prospectus Misrepresentation • Representee Rule • Company Law

House of Lords 1873 LR 6 (HL) 377 Company & Contract ~6 min India

Metadata

CASE_TITLE: Peek v. Gurney
PRIMARY_KEYWORDS: prospectus misrepresentation, representee rule, company law
SECONDARY_KEYWORDS: fraud, promoters’ liability, Sections 17 & 18 ICA, Section 447 CA 2013
AUTHOR_NAME: Gulzar Hashmi
PUBLISH_DATE: 23 Oct 2025
LOCATION: India
Slug: peek-v-gurney

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Quick Summary

This case draws a clear line: a prospectus speaks to first applicants for shares. Only they, as intended readers, can sue for false statements in it.

Main rule: Only the representee (intended recipient) may bring an action.
Result: A later market buyer cannot claim on the original prospectus.
Use in India: Fits with Sections 17 & 18 (fraud, misrepresentation) and ideas behind Section 447 Companies Act, 2013.

Issues

Can a non-allottee (a later market purchaser) claim indemnity for misstatements in the prospectus?

Rules

Action for misrepresentation lies only at the instance of the misled party (representee).
A prospectus is addressed to first applicants; it does not usually extend to later buyers in the market.

Indian links: Indian Contract Act, 1872 — Section 17 (Fraud), Section 18 (Misrepresentation); Companies Act, 2013 — Section 447 (fraud penalty framework).

Facts (Timeline)

View Timeline

Prospectus issued for Overend & Gurney to invite applications for shares.

All shares were allotted in July; the prospectus served its original audience.

Later, Peek bought shares on the stock exchange (October & December), not on the original issue.

Company failed; Peek sought indemnity for alleged misleading statements.

Lower court refused relief; appeal was filed to the House of Lords.

Arguments

Appellant (Peek)

The prospectus statements were false and induced investment.
Loss flowed from reliance on those statements.
Promoters should indemnify for misleading the market.

Respondents (Gurney & others)

The prospectus was addressed only to first applicants.
Peek purchased later on the exchange; he was not the addressee.
No actionable representation made to him.

Judgment

The House of Lords dismissed the appeal. The prospectus spoke to original applicants only; a later buyer is outside that circle.

Peek, as a market purchaser, was not the representee.
No right to indemnity lay against the promoters on the prospectus.

Ratio Decidendi

Only the person to whom the representation was directed—and who relied on it—may sue. A prospectus is aimed at first applicants, not later purchasers.

Why It Matters

Defines the scope of duty of promoters to investors.
Clarifies who is a representee in securities offerings.
Guides reading of misrepresentation principles in Indian law courses.

Key Takeaways

Prospectus liability focuses on first applicants.
Later market buyers usually cannot sue on that document.
Link your claim to being the intended audience and to actual reliance.

Mnemonic + 3-Step Hook

Mnemonic: “FIRST SPEAKS FIRST”

FIRST audience: the prospectus talks to first applicants.
SPEAKS to them: they are the representees.
FIRST right: only they can sue on it.

IRAC Outline

Issue

Can a later stock exchange buyer sue promoters for a misleading prospectus?

Rule

Only the intended recipient (representee) may sue; prospectus targets original applicants.

Application

Peek bought later; the prospectus was not addressed to him; no actionable misrepresentation to him.

Conclusion

Claim fails; no indemnity from promoters.

Glossary

Prospectus: A legal document inviting the public to apply for shares or debentures.
Representee: The person to whom a statement is addressed and who relies on it.
Promoter: One who forms a company and gets investors to subscribe to shares.