Innocent misrepresentation in equity.

No rescission for innocent misrepresentation after completion.

(q) Newham v. May, 13 Price, 749; Leuty v. Hillas, 2 De G. & J. 110; Joliffe v. Baker, 11 Q. B. D. 255, 267; Clayton v. Leech, 41 Ch. D. 103; Sug.V. & P. 235, 251; 2 Dart, V. & P. 904.

(r) Cadman v. Horner, 18 Ves. 10; Savage v. Bracksopp, ib. 335, 338; Wilde v. Gibson, 1 H. L. C. 605, 632, 633; New Brunswick, etc. Co. v. Muggeridge, 1 Dr. & Sm. 363, 383; Lamare v. Dixon, L. R. 6 H. L. 414; above, p. 687.

(s) Attwood v. Small, 6 Cl. &

Fin. 232, 330, 338, 395, 444 sq., 502; Lovell v. Hicks, 2 Y. & C. Ex. 46, 51; Bartlett v. Salmon, 6 De G. M. & G. 33; Conybeare v. New Brunswick, etc. Co., 1 De G. F. & J. 578, 595; Sug. V. & P. 243, 244.

(t) Pulsford v. Richards, 17 Beav. 87, 95, 96; Stanton v. Tattersall, 1 Sm. & G. 529; Aber-aman Ironworks v. Wickens, L. R. 4 Ch. 101; Reese River Silver Mining Co. v. Smith, L. R. 4 H. L. 64, 79, 80; Torrance v. Bolton, L. R. 8 Ch. 118.

The later rule so adopted in the Courts of Equity differed in principle from that applied in the Courts of Law ; for the equitable rule treated innocent misrepresentation as a matter affecting the formation of a contract and invalidating the parties' consent in the manner accomplished at common law by fraud only with respect to ordinary contracts and without fraud in the case of contracts uberrimæ fidei alone {x). Practically, however, the difference was not great (y). To give rise to the right of rescission in equity, a false representation must have been a part of the transaction ending in the formation of the contract, and must have induced the consent of the party misled to the agreement (a). And in the same circumstances the representation would have been considered, at common law, to form part of the contract itself and to amount to a condition precedent to that party's liability under the contract; in which case he might, on breach of the condition, rescind the contract entirely (b). After the commencement of the Judicature Acts, the equitable rule in question became enforceable in all Divisions of the High Court of Justice; it has been followed and approved of by the highest authorities; and as a branch of the law of contract, it has prevailed over the rules of common law (c). Any contract therefore of whatever kind may now be rescinded by any party, who has been induced to enter into it by a material misrepresentation made to him without fraud by any other party thereto (d). And this right, if promptly asserted after the discovery of the untruth, will not be defeated by the fact that the contract has been partly performed (c), so long as the party misled has not received substantially the whole consideration due to him under the contract (f). But it has been held since the Judicature Acts, following the above-mentioned decision in equity to the same effect (g), that where a contract induced by misrepresentation, without fraud, has been entirely performed, so that the party misled has received the whole consideration due to him thereunder (as happens when a contract for the sale of land has been completed by conveyance and payment of the purchase money), he can no longer assert any right in equity to set the agreement aside (h). It has been decided, however, that in such case he may still sue at law for damages sustained by him in consequence of the false representation, if it amounted to a warranty (i). Otherwise he has no remedy, unless he can claim damages for a breach of some covenant for title (k). It has further been finally established since the Judicature Acts that, in order to give rise to an action of deceit or any other proceedings (l) for a fraudulent misrepresentation, the representation must have been made either knowingly (without belief in its truth) or recklessly (without caring whether it was true or false); and that if a representation inducing a contract were made honestly in the belief that it was true, it is not sufficient to support an action of deceit that the party making the mis-statement had no reasonable grounds for this belief. In other words, a man making such a statement is under no obligation to take reasonable pains to ascertain that it is true (m).

Difference in principle between the rules of common law and equity as to innocent misrepresentation.

The law since the Judicature Acts.

(«) Wilde v. Gibson, 1 H. L. C. 605, 632, 633. It should be noted that this decision, though professedly founded on the principle that a Court of Equity will not rescind a contract for misrepresentation unless made knowingly (that is, fraudulently), accords with the rule of the common law, which allowed no rescission for innocent misrepresentation after the contract had been substantially performed; above, pp. 725, 727, 728.

(x) See above, pp. 723, 724.

(y) Bowen, L. J., Newbigging v. Adam, 34 Ch. D. 582, 592.

{a) See below, p. 738.

[b) Above, pp. 724, 726-728.

5(2)

(c) Redgrave v. Kurd, 20 Ch. D. 1, 12; Smith v. Land and House Property Corp., 28 Ch. D. 7; Newbigging v. Adam, 34 Ch. D. 582; affirmed, nom. Adam v. Newbigging, 13 App. Cas. 308; Derry v. Peek, 14 App. Cas. 337, 347,359; Karberg's case, 1892, 3 Ch. 1, 13; Whittington v. Seale-Hayne, 82 L. T. 49.

(d) Admitted and applied, Re Hare and O' More's Contract, 1901, 1 Ch. 93, 96 ; above, p. 633, n. (y).

(e) See last note but one.

(f) See above, pp. 725, 727, 728, 730, 731, n. (u).

(g) Above, p. 730.

(h) Selborne, C, Brownlie v. Campbell, 5 App. Cas. 925, 937, referring the case of Hart v. Swaine, 7 Ch. D. 42, to the ground of fraudulent misrepresentation; Joliffe v. Baker, 11 Q. B. D. 255, 272; Cotton, L. J., Soper v. Arnold, 37 Ch. D. 96, 102; Clayton v. Leech, 41 Ch. D. 103; Farwell, J., May v. Platt, 1900, 1 Ch. 616, 623; Debenham v. Sawbridge, 1901, 2 Ch. 98; above, pp. 540, 577, 578.

(i) De Lassalle v. Guildford, 1901, 2 K. B. 215; above, p. 540.