Question

Peek v. Gurney is a famous case relating to

• A. Mistake
• B. Misrepresentation
• C. Fraud
• D. Frustration of contract

Hint:

For Contract Law, associate landmark English cases with the specific legal principles they established. For example, \textit{Carlill v. Carbolic Smoke Ball Co.} for general offers, \textit{Hadley v. Baxendale} for remoteness of damages, and \textit{Peek v. Gurney} for the scope of misrepresentation.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
The question asks to identify the area of contract law to which the landmark English case of \textit{Peek v. Gurney} belongs. This case is pivotal in understanding the scope of liability for false statements made during contractual negotiations.
Step 2: Detailed Explanation:
Peek v. Gurney (1873) is a leading authority on misrepresentation, specifically fraudulent misrepresentation, in the context of a company prospectus.
Facts of the case: The promoters of a company issued a prospectus containing false statements. The appellant, Peek, did not buy shares directly from the company based on this prospectus. Instead, he bought shares later on the open stock market. When the company went into liquidation, he sued the promoters (Gurney and others) for his losses, claiming he had relied on the false statements in the prospectus.
The Ruling: The House of Lords held that the promoters were not liable to Peek. The court reasoned that the purpose of a prospectus is to induce the original subscribers (allottees) to buy shares from the company. Once the shares are allotted, the prospectus has served its purpose. It is not intended to be relied upon by subsequent purchasers in the secondary market. Therefore, there was no misrepresentation *to Peek*.
While the case involves false statements made knowingly (which is fraud), its primary legal principle relates to who can sue for misrepresentation and establishes that the representation must be made to the party who is misled. Therefore, it is a foundational case in the law of misrepresentation. Given the options, Misrepresentation (B) is the broader and more accurate legal category for this case's principle, although Fraud (C) is also involved in the facts. In legal education, it is most famously cited under the heading of Misrepresentation.
Step 3: Final Answer:
The case of \textit{Peek v. Gurney} is a famous case relating to Misrepresentation.