At common law, the only remedy available to a person induced into entering a contract by an innocent misrepresentation (which was not a term of the contract) was rescission of the contract. Because rescission requires that parties be restored to their pre-contract positions, this remedy may be lost if the contract has been performed. Generally, the plaintiff had no right to damages for any loss suffered as a result of an innocent misrepresentation, although they could obtain a limited form of indemnity.
In 1962, the English Law Commission published a report on the subject of innocent misrepresentation. The recommendations contained in that report were substantially implemented by legislation in the United Kingdom which allowed an award of damages and ensured that the right to rescission was not barred where a contract had been performed. South Australia enacted similar legislation in 1971.
Terms of Reference
In 1971 the Committee was asked to consider whether there were any alterations desirable in the law relating to innocent misrepresentation and the remedies available for such misrepresentations.
Outcomes
In September 1984, the Attorney General announced that the Government had decided not to take any action on the recommendations contained in the Commission’s report in view of developments in the law since it had been submitted. For example the Trade Practices Act 1974 (Cth) ss 52–53 applies to all forms of misrepresentation by a corporation in trade or commerce and allows a wide range of relief including rescission, damages or both. Corresponding sections in the Fair Trading Act 1987 (WA) allow similar relief against misrepresentations made by individuals in trade or commerce.
