East v Maurer [1990]

East v Maurer [1990] EWCA Civ 6 is a notable case in English contract law, focusing on the issue of misrepresentation.

The facts of the case revolve around Maurer's fraudulent communication to East, assuring him that he would refrain from establishing a competing hair salon. Relying on this misrepresentation, East proceeded to purchase the salon from Maurer. However, Maurer went back on his word and initiated the operation of a rival hair salon, leading to a significant loss of business for East. Subsequently, East brought a legal suit against Maurer, alleging deceit.

In rendering its judgment, the Court of Appeal made a comprehensive assessment of the damages to be awarded to East. The court determined that East was entitled to recover the original purchase price of the salon, but this amount should be reduced by the selling price. Additionally, East could claim compensation for trading losses incurred due to Maurer's deceptive actions. The court also allowed recovery for the expenses associated with the purchase and sale of the salon, as well as the costs incurred in making improvements to the business premises.

A noteworthy aspect of the judgment was the inclusion of £10,000 in foregone profits as part of the damages awarded to East. The Court of Appeal justified this by stating that foregone profits could be recoverable in tort when the claimant could reasonably be expected to earn them in a similar line of business, such as hairdressing. Importantly, the court clarified that in order to claim profits specific to the particular business, evidence of a breach of a contractual warranty was required.

In essence, the judgment in East v Maurer exemplifies the court's meticulous consideration of the various aspects of damages, taking into account not only the immediate financial losses suffered by East but also the broader financial implications and opportunity costs associated with the misrepresented transaction.
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