1MISREPRESENTATION (3): TYPES AND REMEDIES Professor Michael Ford QC Introduction 1. In this lecture, we'll consider the different types of misrepresentation and the different remedies for misrepresentation. Again, we shall focus principally on a misrepresentation made by A to another party to the contract, B 2. Types of misrepresentation. There are four kinds of misrepresentation to consider, with some difference in remedies, both at common law and under the Misrepresentation Act 1967 (MA): (1) Fraudulent misrepresentation - the tort of deceit; (2) Negligent misrepresentation - tort liability in negligence (not so relevant to misrepresentations between contracting parties owing to (3) below); (3) A misrepresentation where A cannot prove he had reasonable grounds to believe the facts represented were true, for which damages are payable under s.2(1) MA 1967 (unless the misrepresentation is to a consumer and s.2(4) applies); (4) Innocent misrepresentation - that is a false representation which is not made fraudulently and where there are reasonable grounds for the belief and it isn't negligent - including damages under s.2(2) MA 1967 (unless the misrepresentation is to a consumer and s.2(4) applies); 3. Remedies. There are two, broad types of remedies to consider. (1) Rescission - this means, in broad terms, that you set aside the contract and restore the parties to their position beforehand (though some adjustments can be made: see below). This is the usual remedy for misrepresentation: see Salt v Stratstone [2015] EWCA Civ 745 per Longmore LJ at §24. Note: i. Rescission is potentially available for all types of misrepresentation where the misrepresentation is made by the other contracting party, A. But its availability is subject to the 'bars' on rescission - see later.
ii. For non-fraudulent misrepresentations - that is §2(2)-(4) above - the remedy of rescission is also subject to the discretion of the court to award damages in lieu of rescission under s.2(2) MA. (2) Damages - in general terms, damages here means the financial loss caused by misrepresentation, based on reliance loss, not expectation loss (contrast damages for breach of a term: remember Wemyss v Karim). Apart from damages under s.2(2) MA, the damages are potentially an additional remedy to rescission to which a claimant is entitled (though if money is awarded in the rescission claim, the claimant may not recover twice for the same loss). Damages are potentially available as a right as follows: i. For deceit/fraudulent misrepresentation; ii. For negligent misrepresentation in tort; iii. For a misrepresentation made by another party to the contract under s.2(1) MA (subject to s.2(4) in relation to a misrepresentation made to a consumer). (3) Discretionary damages - damages are not available as a right for an 'innocent' misrepresentation- one which is not fraudulent, negligent or within s.2(1) MA - unless the court decides in its discretion to award damages in lieu of rescission under s.2(2) MA. These damages too are not available if s.2(4) applies in relation to a misrepresentation made to a consumer. 4. The old cases must be seen in their context.