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

Published

May 22 2019

Written By

Partner
UK

I am a partner and co-head of our International Dispute Resolution Group, as well as the London team. I specialise in complex disputes, often of a cross border nature, and have particular expertise in the aviation & defence sector, commercial life science, and in matters involving fraud.

Practices

International Dispute Resolution

Countries

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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