Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158
Contract law – Misrepresentation – Damages – Fraud – Business Purchase – Loss – Breach of Contract – Deceit – Remoteness of Damage
Facts
The complainant, Mr Doyle, decided to purchase an Ironmonger’s business from the defendants, Olby (Ironmongers) Ltd. He purchased the business for £4,500 and the stock at £5,000. It had been detailed that the business would be ‘all over the counter’, but it turned out that half of business was through a travelling salesman. The complainant made heavy losses and although he had managed to sell the business to a third party for £3,700, he had suffered debts as a consequence.
Issues
The court had awarded Mr Doyle £1,500 for the deceit of the business sale. This figure was based on the cost of employing a part time traveller. The complainant appealed this decision to the Court of Appeal.
Decision/Outcome
The Court of Appeal held that the damages the complainant should receive must be increased to £5,500. Mr Doyle should be entitled to recover his losses and all damages that directly result from the deceit of buying the business. The award he had received was based on damages for breach of contract, which were different to fraudulent misrepresentation. The damages should put the complainant into the position he would have been in if there had been no false representation by the defendant in the course of the sale. The defendant cannot say they could not have reasonable foreseen this loss. Thus, this case established that damages for breach of contract are different from those of fraud and conspiracy.
Updated 19 March 2026
This article accurately summarises the facts and outcome of Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 and the Court of Appeal’s reasoning on the measure of damages in fraudulent misrepresentation. The case remains good law and continues to be cited as the leading authority for the proposition that damages in deceit are assessed on a tortious basis — restoring the claimant to the position they would have been in had the tort not been committed — rather than on a contractual expectation basis.
One point of clarification worth noting: the article states that the defendant ‘cannot say they could not have reasonably foreseen this loss.’ This requires care. The correct principle from the case, as subsequently affirmed by the House of Lords in Smith New Court Securities Ltd v Citibank NA [1997] AC 254, is that in deceit all losses that flow directly from the fraudulent misrepresentation are recoverable, and the usual tortious foreseeability test does not apply as a limiting principle in the same way it does in negligence. Losses need not be reasonably foreseeable provided they are a direct consequence of the fraud. Smith New Court significantly developed and extended the principles in Doyle v Olby and students should read that case alongside this one for a complete understanding of the current law on damages in deceit.
The article is otherwise broadly accurate and the core legal principles it describes remain current.
