A misrepresentation is an unambiguous false statement of fact (or law, since Pankhania v Hackney) made by one contracting party to another which induces the other party to enter the contract. There are three categories, distinguished by the state of mind of the representor:
1. **Fraudulent** (Derry v Peek) — knowingly false, or made recklessly without belief in its truth. Damages on the tort of deceit measure: all losses flowing directly from the inducement, whether foreseeable or not (Doyle v Olby). 2. **Negligent** — made without reasonable grounds for belief; covered by section 2(1) Misrepresentation Act 1967 with the "fiction of fraud", or at common law where Hedley Byrne special relationship exists. 3. **Innocent** — false but made with reasonable grounds. Remedy is rescission (or damages in lieu under s.2(2)).
Rescission, the primary equitable remedy, restores the parties to their pre-contract position and is barred by affirmation, lapse of time, third-party rights, and impossibility of restitution.
Authority
A party to a contract was induced to enter into it by a misrepresentation that was made negligently.
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26 landmark · 0 recent judgments · 19 semantic matches for “misrepresentation”