Rescission for misrepresentation: a lower hurdle for claimants in cases of fraud

By Sophie Eyre, Alice Lindvall

05-2019

Those seeking to unravel a contract on the basis of a pre-contractual fraudulent statement will not have to show that the statement in question was the reason they entered into the contract in order to succeed in their claim. The Court of Appeal has confirmed that it will be enough for a claimant to show that the false statement "materially influenced" their decision to enter into a contract, or that it was "actively present to his mind" to prove that they were induced by the statement[1].

The test for inducement where there is no fraud – i.e. where false statements and assurances were given negligently but not deliberately or recklessly – is stricter. To succeed in claiming damages or rescinding a contract in such cases, a claimant will still need to show that it would not have entered into the contract with the defendant but for the relevant statements.

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