The following Dispute Resolution guidance note Produced in partnership with Charles Spragge of Druces LLP provides comprehensive and up to date legal information covering:
This Practice Note sets out when and how an innocent party can rescind a contract for misrepresentation, why they would wish to do so and when rescission is not permissible.
For guidance on when a party may recover damages for a misrepresentation or seek to limit/exclude liability for misrepresentation, see Practice Notes:
Misrepresentation—damages as a remedy
Misrepresentations—excluding and limiting liability for them
A party who was induced to enter into a contract by a misrepresentation may elect to rescind the contract. If the rescission is challenged, that party may seek the assistance of the court to give effect to the rescission.
The effect of rescission, where available, is to put the parties back in the position they were in before the contract was made. It is sometimes referred to as rescission ab initio to distinguish it from termination or cancellation that does not nullify the contract, but brings it to an end.
Rescission is available as a remedy whether the misrepresentation was fraudulent, negligent or innocent, provided the statement made induced the representee to enter into the contract and it was false.
It is an equitable remedy granted in the court’s discretion. Importantly, the representee is not required to show that they suffered any loss.
Once the representee has become aware of the false statement that induced them
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