• In the case of Redgrave v Hurd [1881] 20 Ch. D. 1, the court held the representation doesn’t have to be proven correct or wrong if the party still relied upon it and was induced into the contract as a result.
  • This contract law case is about rescission, misrepresentation and specific performance of a sale of business.

Facts of the Case

  • C is a solicitor who advertised an accommodation for another elderly solicitor.
  • D responded to the advertisement and after correspondence eventually consented to a contract to purchase the suburban residence for £1600.
  • D did not complete the contract on the grounds that the business had little value. C contended that this was specific performance.
  • D rebutted this claiming C misrepresented the business and requested for damages for the loss of turning down his practice.

Issues

  • Should the contract have been completed?
  • Should the contract be rescinded due to misrepresentation?

Held by Court of Appeal

  • Appeal allowed – D could rescind the contract after relying on the misrepresentation even though D could have discovered the truth of C’s representation.

Jessel MR

Misrepresentation

  • Previous decision should be reversed because D was induced to consent to the contractual obligation based on C’s material false statements.
  • “No man ought to seek to take advantage of his own false statements”.
  • This case is similar to Attwood v Small [1838] 6 Cl F 232 because both cases bring up the issue of reliance on representation. Similarly in this case “reasonable diligence” should have been applied to ascertain whether the facts were true or false but it’s not a valid defence.
  • “Where you have neither evidence that he knew facts to shew that the statement was untrue, or that he said or did anything to shew that he did not actually rely upon the statement, the inference remains that he did so rely, and the statement being a material statement, its being untrue is a sufficient ground for rescinding the contract”.

Lush LJ

Burden of proof

  • D’s contract should be terminated based on the misrepresentation concerning the business.
  • “Where a false representation has been made it lies on the party who makes it, if he wishes to escape its effect in avoiding the contract, to shew that, although he made the false representation the Defendant, the other party, did not rely upon it. The onus probandi is on him to shew that the other party waived it, and relied on his own knowledge. Nothing of that kind appears here”.

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