When a contract has been agreed on the basis of a fraudulent misrepresentation, which of the following remedies are available?

When a contract has been agreed on the basis of a fraudulent misrepresentation, which of the following remedies are available?
A . Damages only
B. Rescission only
C. An injunction only
D. Both damages and rescission

View Answer

Answer: C

Explanation:

An untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. An action for misrepresentation can be brought in respect of a misrepresentation of fact or law. There are three types of misrepresentation:

– Fraudulent misrepresentation: where a false representation has been made knowingly, or without belief in its truth, or recklessly as to its truth.

– Negligent misrepresentation: a representation made carelessly and in breach of duty owed by Party A to Party B to take reasonable care that the representation is accurate. If no "special relationship" exists, there may be a misrepresentation under section 2(1) of the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds for believing its truth.

– Innocent misrepresentation: a representation that is neither fraudulent nor negligent. The remedies for misrepresentation are rescission and/or damages. For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. For innocent

misrepresentation, the court has a discretion to award damages in lieu of rescission; the court cannot award both (see section 2(2) of the Misrepresentation Act 1967). For more information, see Practice note, Misrepresentation.

Reference:

– Misrepresentation

– CIPS study guide page 55 LO 1, AC 1.2