The remedy of rescission is, in principle, available for all classes of operative misrepresentation. When a person has been induced to enter into a contract by a misrepresentation of any description, the effect on the contract is not to make it void, but to give the misled party an option either to avoid it or, alternatively, to affirm it.26


Rescission, however, is not merely a judicial remedy. The misled party can rescind WITHOUT seeking the assistance of the Court, and any property transferred to the representor under the contract will revest in the party who has so rescinded the contract. As a normal rule, rescission must be communicated to the other party.26A



However, under Section 2(2) of the U.K. Misrepresentation Act 1967, and under Section 45(2) of the Irish Sale of Goods and Supply of Services Act 1980:

Such circumstances, however, are unlikely to exist in the case of an Endowment Mortgage Contract (or a similarly structured investment contract).

Also, as we have seen in Section 2.3.4 (a), when the misrepresentation is effected by a breach of duty to disclose, in cases where a fiduciary or confidential relationship exists the injured party will be entitled to rescind the contract or transaction, while in cases where a special relationship exists (under the principle enunciated in Hedley Byrne) the injured party will (generally) not be entitled to rescind.27



Coupled with the right to revoke the contract there may be a right to sue for damages for any loss suffered as a result of the misrepresentation. For example, in the case where a party enters into an Endowment Mortgage Contract (or any other investment-type contract) as a result of a misrepresentation, it is clear that merely exercising his right to rescind would offer him no proper remedy. He would also require payment of ‘damages’.


How, then, are these ‘damages’ to be assessed?

 

 

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