Can do so, provided the misrepresentation is not fraudulent.
If innocent, no issue because cannot get damages. If negligent, could possibly exclude- torts area.
Rescission
Main Rule
Structured discretion.
Common law – no rescission unless parties can be put back in same position before contract (precise restitutio)
Equity – more flexible, sufficient that substantial restitutio is possible. Equity allows for adjustments to be made (Alati v Kruger)
Bars
Affirmation
Coastal Estates v Melevende- if right to elect comes from common law, require both knowledge of facts (which give right to rescind) and knowledge of right to rescind. If right to elect comes from contractual term, only require knowledge of facts which activate term.
Once elected, can’t go back and rescind.
Doing nothing? Authorities unclear.
Paterson- just a fact courts consider.
Carter- Must elect within reasonable time. Governed by whether time period amounts to unequivocal conduct affirming contract. Period longer for executory contracts.
Leaf v International Galleries- UK case- lapse of time is bar where innocent misrepresentation. Aus position unclear.
Third party rights involves
Law favors innocent third party. Car Financing v Caldwell- no rescission, third party rights prevail.
Execution of the contract (Rule in Sneddon’s Case)
Wilde v Gibson- where sale of land, and sale has been concluded, rescission will not be allowed unless fraudulent.
Does it apply outside land contracts? Authorities unclear.
Practitioner’s book (O’Sullivan) says rule only applies in cases of land.
Leason v Princes Farms- NSW - only land.
Paterson- one way around rule- where misrepresentation unconscionable, that really is fraud, and rule won’t apply.
Damages
Can only be awarded where fraudulent or negligent. General principle- put parties back into original position (tort).
Damages designed to reflect difference between price paid and real value, and fix gap.
Where tort is deceit, consequential losses can also be recovered- see Professional Services of Australia v Computer Accounting.
Do losses need to be reasonably foreseeable?
Professional Services- as long as linked to deceit, losses could be recovered.
Archer v Brown- gives idea of what consequential losses might include.
Generally easier to recover in deceit once it is proved.
Claiming damages in contract and tort?
If contract affirmed, can claim in either tort or breach (if misrepresentation is a term) but not both.
If contract is rescinded, cannot sue for breach, and cannot sue for damages in tort because that would be double dipping. But may be able to sue for consequential losses. May be difficult to show that loss was suffered.
Misleading and Deceptive Conduct
Bodies subject
Corporations (s 131), natural persons (s 6), persons involved in contravention (s 2)
Sutton – must have knowledge of essential facts of contravention, cannot be constructive- Crocodile Marketing
Need to know information is erroneous and be passing it on as one’s own.
Compare John G Glass (agent liable; brochure from vendor wrong) and Butcher (reasonable person would believe not source of information; expressly & impliedly disclaimed liability).
‘In trade or commerce’
Defined broadly in s 2.
Not for personal injury claims: Concrete Constructions v Nelson.
Does not cover domestic sale of non-business asset: O’Brien. Using commercial techniques insufficient.
Houghton v Arms – employees of business, still working in trade/commerce.
Bevanere v Lubidineuse – a) sale of capital asset, even though not in normal activities, is sufficient, b) extends to representations about employees.
TCN Channel 9 v Illvariy – can refer to activity of either party.
Bond – includes professional activity (note also words in statute).
Is the conduct misleading or deceptive?
Are misleading and deceptive the same?
Henjo – Lockhart J – not synonymous, mislead is wider, deceive involves moral turpitude.
Parkdale – Gibbs CJ – not confined to intentional or negligent conduct.
Being misled means having been led into error (Henjo), and being deceived means being induced to believe a false thing that the other party knows is false (Re London & Globe Financial; Henjo).
Campbell v Backoffice – French CJ – does the conduct viewed as a whole have a tendency to lead a person into error? Consider cause and effect relationship between conduct and state of mind of relevant person or class of persons.
Downey v Carlson (referring to Butcher and Campomar) – what a reasonable person in the position of the [representee], taking into account what they know, would make of the [representor’s] behavior.
Individual
Butcher v Lachlan Elder Realty – consider:
Conduct as a whole (was a disclaimer)
Nature of representee (P was shrewd, intelligent and self-reliant)
Disclaimer not absolute; a factor to be considered.
Public at large
Campomar v Nike – audience were ordinary and reasonable members of the public who are prospective purchasers.
