CONTRACT LECTURES
TRANSCRIPT LECTURE 7
MISREPRESENTATION PART 2 Total time = 59 mins 30 seconds
CLAIRE STRICKLAND
Track/slide 16 06.28
Rescission is not available in the following situations:
i.
where the misrepresentee has AFFIRMED the contract – whether by
words or conduct
ii.
where it is impossible to restore the parties to their positions before
the contract was made – for instance, if the subject matter of the
contract was a consumable or has greatly deteriorated, which is
obvious as this defeats the whole object of rescission. However,
the court has discretion here and may order rescission where it
can achieve a ‘practically just result’ by the use of monetary
adjustments to reflect any benefits or detriments which have
accrued since the making of the contract
iii.
where an innocent third party has bought the subject matter of
the contract BEFORE the misrepresentee has communicated
his decision to rescind – because up to the point of rescission
the representor has good title in the goods, as we saw in the
Caldwell case 1964.
iv.
lapse of time – the court may decide that there has been such a
lapse of time between the original contract and discovery of the
misrepresentation that rescission is not available. This is what
happened in Leaf v International Galleries 1950. In this case
the plaintiff had bought a painting of Salisbury Cathedral and
the defendants had innocently represented that it was painted by
Constable. When the plaintiff attempted to sell the painting 5 years later
he discovered that it was not a Constable and tried to return it to
the gallery and get his money back. When they refused he
brought an action claiming rescission of the contract.
Rescission was refused on the ground that 5 years was too long a
delay in bringing the action. This seems slightly unfair, since
one can only be said to have affirmed the contract once one has
actually discovered the misrepresentation. So why should someone
be penalised for not realising the misrepresentation for some length of time?
And what would be the cut off point? It is hard to say.
v.
If the court refuses rescission under section 2(2) of Misrepresentation Act 1967
Apart from Fraudulent misrepresentation, the court may refuse rescission
where it feels it would be equitable to do so in the circumstances
and instead of rescission, the contract is said to continue and the
court will award damages in lieu of rescission. The reason for
this is to give the courts power to avoid rescission where
rescission might be too ‘drastic’ a remedy – for instance if
it seems too harsh for an innocent misrepresentation.