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Contract: Misrepresentation and Duress

Innocent misrepresentation, rescission and its bars

  • 3 things to know
  • A2 Units 3 and 4

Overview

Recall questions on why damages are not available as of right, indemnities, affirmation in Long v Lloyd, lapse of time, third party rights, and the difference from termination for breach.

What you need to know

Answer each one before you reveal it.

Your recallNot started
Numbers

What is an indemnity, and how does it differ from damages?

Key term

How did affirmation defeat the claim in Long v Lloyd (1958)?

Numbers

How do the rights of a third party bar rescission?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Define innocent misrepresentation.

    Model answer

    An innocent misrepresentation is a false statement made by a party who had reasonable grounds to believe, and did believe up to the time of contracting, that it was true.

  2. 2

    What is the primary remedy for innocent misrepresentation?

    Model answer

    The primary remedy is rescission of the contract, which may be accompanied by an indemnity for obligations necessarily created by the contract.

  3. 3

    Why are damages not available as of right for an innocent misrepresentation?

    Model answer

    The maker was neither dishonest nor careless, so there is no wrongdoing to compensate, and the law limits the response to undoing the transaction unless the court awards damages in lieu of rescission.

  4. 4

    What is an indemnity, and how does it differ from damages?

    Model answer

    An indemnity covers only expenses the contract itself compelled the innocent party to incur, whereas damages compensate for all recoverable loss, and Whittington v Seale-Hayne (1900) allowed rates and repairs required by the lease but not lost stock or medical bills.

  5. 5

    What is rescission?

    Model answer

    Rescission is an equitable remedy setting the contract aside and restoring both parties as far as possible to the position they were in before it was made.

  6. 6

    How is the right to rescind exercised?

    Model answer

    The representee gives notice of rescission to the other party, or where that party has absconded takes some other reasonable step to show the election, and may apply to the court for consequential orders.

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Law Making in Wales and the UK
Delegated Legislation
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Roles v Nathan ( ).
196319411945

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AThe defendant owed the victim a duty of care and breached it.
BThe breach carried a reasonably foreseeable risk of death.
CThe breach caused the death.

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Pecuniary loss is financial and measurable.
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