Lloyd's Maritime and Commercial Law Quarterly
Damages in lieu of rescission
Salt v Stratstone
1. Introduction
Does the Misrepresentation Act 1967 permit the courts to grant damages “in lieu of rescission” where the misrepresentee once had a right to rescind but rescission is barred by the time of the trial? This question was considered by the Court of Appeal in the recently reported case of Salt v Stratstone Specialist Ltd.1
Section 2(2) of the Misrepresentation Act 1967 provides:
“Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded, the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party.”
In their seminal article on the Act, Professors Atiyah and Treitel identified an immediate ambiguity:2
“The new remedy is available where a person ‘would be entitled, by reason of the representation, to rescind the contract’. What is the effect of these words? Can the court award damages if the
1. Salt v Stratstone Specialist Ltd (t/a Stratstone Cadillac Newcastle) [2015] EWCA Civ 745; [2016] RTR 17.
2. PS Atiyah and GH Treitel, “Misrepresentation Act 1967” (1967) MLR 369, 377.
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