The test is an objective one. There is no requirement to establish fraud. If the innocent party can prove the statement was in fact false, it will be for the maker of the statement to establish that it reasonably believed in the truth of the statement that is, the representation. A remedy for negligent misrepresentation does remain at common law, however its use in contractual situations has been greatly diminished as a result of section 2 1 of the MA Only a misrepresentation made entirely without fault can be described as an innocent misrepresentation.
If A is unable to show it had reasonable grounds to believe its statement was true the misrepresentation will be fraudulent or negligent. Whether the misrepresentation was fraudulent, negligent, or innocent will determine what remedy may be available. If the misrepresentation is fraudulent or negligent the court can award damages and rescind the contract, although where negligent misrepresentation occurs the court does have discretion to award damages in lieu of rescission. If the contract is rescinded it is set aside and the parties are put back into the position they would have been in had the contract never been entered into.
If the misrepresentation is an innocent one, the court has discretion to award rescission or damages in lieu of rescission; the court cannot award both damages and rescission.
Where the right to rescission arises the claimant will have a choice whether to rescind the contract or affirm it. If the contract is affirmed it will continue. Damages in lieu of rescission can only be awarded where the right to rescind the contract still exists. If that right has been lost for example if the contract has been affirmed the right to damages in lieu of rescission will also be lost. There are a number of ways a party to a contract can attempt to limit liability for any misrepresentation.
There is no guarantee that a limitation or exclusion of liability clause will work. Some ways will work but others may not. If no "special relationship" exists, there may be a misrepresentation under section 2 1 of the Misrepresentation Act where a statement is made carelessly or without reasonable grounds for believing its truth. Innocent misrepresentation: a representation that is neither fraudulent nor negligent.
For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. CA , among other measures, makes provision for the extended use of live links and audio links in criminal proceedings. Skip to main content. Sign in Contact us. Legal Guidance. Cross border enforcement. Insolvency for dispute resolution practitioners. Actionable misrepresentation and negligent misstatement.
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The remedy for negligent misrepresentation is contract rescission and possibly damages. The third type is a fraudulent misrepresentation.
A fraudulent misrepresentation is a statement that the defendant made knowing it was false or that the defendant made recklessly to induce the other party to enter a contract. The injured party can seek to void the contract and to recover damages from the defendant.
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