Damages for negligent misrepresentation and the reverse burden of proof (Misrepresentation Act 1967 s.2(1))

Section 2(1) of the Misrepresentation Act 1967 applies where a person has entered into a contract after a misrepresentation has been made to him by another party to it and has suffered loss as a result. The representor is liable to damages as if the misrepresentation had been made fraudulently, notwithstanding that it was not, "unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true". The burden is therefore on Sunita, not Tom. Relying on three-year-old accounts when current figures were readily available is unlikely to amount to reasonable ground for belief, so Tom is likely to succeed.

Why B is wrong: s.2(1) reverses the burden: once Tom shows a misrepresentation that induced the contract and caused loss, Sunita must prove reasonable grounds for her belief.

Why C is wrong: s.2(1) gives a damages remedy for non-fraudulent misrepresentation, and rescission is not the only remedy available.

Why D is wrong: s.2(1) applies to a misrepresentation that induced the contract; the statement does not need to have become a contractual term.

Why E is wrong: proving knowledge or recklessness is the test for fraud; s.2(1) makes the representor liable as if fraudulent without proof of fraud.