174Damages for misrepresentation

174 Damages for misrepresentation (1) This section applies if a person (the first person) enters into a contract after a non-fraudulent misrepresentation is made to the first person by— (a) another party to the contract; or (b) a person acting for another party to the contract; or (c) a person who receives any direct or indirect material advantage because of the formation of the contract. (2) If the first person suffers loss because of entering into the contract, anyone (whether or not that person made the misrepresentation) who would be liable for damages in tort for the loss, if the misrepresentation had been made fraudulently, is liable for damages for the loss. (3) It is a defence to an action under subsection (2) that— (a) if the representation was made by the defendant—the defendant had reasonable grounds for believing, and did believe up to the time the contract was made, that the representation was true; or (b) if the representation was made by a person acting for the defendant—both the defendant and that person had reasonable grounds for believing, and did believe up to the time the contract was made, that the representation was true.