Previous: Unconscionable bargains

Introduction

English law is not sympathetic to mistakes in contracts: bad bagains are your own fault, and duress and undue influence must generally be asserted by the innocent party. Although in some cases, it is possible for a mistake to void a contract entirely; for example, when trust and confidence is undermines in undue influence.

Misrepresentation is one way of voiding a contract for a mistake. If the mistake is ‘your own fault’, misrepresentation will not help. However, if you have been induced into a contract, you may be able to void the contract under the principle of misrepresentation.

Consequences

A misepresentation by a non-innocent party will cause a contract be voidable. That is, an innocent party may assert that a misrepresentation has occurred and then rescind the contract. Of course, a contract can also be rescinded if there had been a total failure of consideration (one party hasn’t ‘done anything’ towards the contract) or if fraud has occcurred. Equity may assist in granting rescission.

Rescission is the primary remedy for a misrepresentation. Damages are generally unavailable where a contract has been rescinded, although a statutory claim (see below) or a tort claim may be possible in addition to rescission. It is important to note that a misrepresentation, occurs prior to the formation of a contract, therefore an action for breach of contract will be unavailable, unless the misrepresentation can be said to have become a term of the contract...

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