CATEGORY: Innocent Misrepresentation

Misrepresentation Act 1967 s.2(2) gives the court a discretion to award damages in lieu of
rescission




requirements

Here the rerpesentor can demonstrate grounds for belief in the truth of the staetemnt

If a representor has reasonable grounds to believe the statement to be true and he does not act negligently, the representation is a wholly innocent misrepresentation, as in Redgrave v Hurd (1881)




Redgrave v Hurd
An innocent misrepresentation can give a right to rescission on the basis that no man ought to take advantage of his own false statements


The effect of a misrepresentation is not prevented by negligence on the part of the representee, Attwood v Small does not stand for that proposition


It was sufficient for rescission that D had relied on the misrepresentation




Leaf v International Galleries (1950).

If the innocent party takes too long to attempt to rescind the contract, he may not be entitled to a remedy as in lead v international galleries




Whittington v seal hayne

facts

C leased a poultry farm; C alleged that they were induced to take up the lease because of the representation made by D's agents that the premises were in sanitary condition and in good state of repair

This was not the case-the water supply was poisoned; the poultry died, and the farm manger became ill

C had to carry out extensive repairs to the property and sought an indemnity

Held- innocent misrep. but claim would fail as damages cannot be recovered for innocent misrep.

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REMEDY: Rescission

Car and Universal Finance Co v Caldwell [1965] 1 QB 525




Car and Universal Finance Co v Caldwell [1965] 1 QB 525

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Typically the party who has been misled by a misrepresentation may initiate proceedings

for rescission of the contract, to obtain a court order, however it is possible to achieve

rescission without recourse to the court

limitaitkons

Bar 1: Affirmation




Long v Lloyd

• Once a representee has affirmed, the right to rescind is lost - Long v Lloyd




Leaf v International Galleries
• Lapse of time




Bar 2: Restitution Impossible

Clarke v Dickson (1858)




• Could not rescind - the company had been converted (joint stock corporation)




Thomas Witter v TBP Industries Ltd [1996] 2 All ER 573


acob J held that rescission for misrepresentation was not available due to the inability

to make restitution "I would not have granted rescission.

• This remedy is not available where it is not possible to restore the parties to their

position before the contract"

Bar 3: Third parties have acquired rights

Crystal Palace Football Club (2000) Ltd v Dowie [2007] EWHC 1392




Rescission was not available because of third party interests. Rescission would have

meant reviving Ds employment with Crystal Palace and the club now had a new

manager

Misrepresentation atc 1967

S1 -

provides that a contract may be rescinded for misrepresentation even if the misrepresentation is also a term of the contract




S2

provides that the representee may claim damages caused by fraudulent misrerepresentation, unless teh representor had reoasnable grounds to believe that his representation was true at the time of making the contract




S3

provides that if a contract contains a term which excludes or limits liability arising out of a misrepresentation, then that term shall no longer have an effect - business to business contracts




excluding liability for consumer contracts

The exclusion or limitation of liability for misrepresentation in B2C will be subject to a test of fairness under the CRA 2015.