• In the case of Salt v Stratstone Specialist Ltd [2015] EWCA Civ 745, the court held damages for rescission of contract according to s 2(2) of the Misrepresentation Act 1967 can only be claimed if the equitable remedy of rescission was available.
  • This contract law case is about misrepresentation and rescission.
  • Delaying seeking rescission is not always available for rescinding a contract as per Leaf v International Galleries [1950] 2 K.B. 86. The principles established from that case are contested in this one.

Facts of the Case

  • C previously claimed a contract on the sale and purchase of a luxury sports car should be rescinded.
  • The car was sold as brand new but it had been repaired and owned before by D, the car company. C claimed that they would have not brought the car if they knew it was not brand new and claimed misrepresentation.
  • The lower courts held that restitutio in integrum could not be applied because there was a delay in seeking remedies (s 35 of the Sale of Goods Act 1893) since the sale and the car had now been registered.

Issues

  • Did the car still exist?
  • Is registration a bar to rescinding the contract?
  • Which party is affected by the difference in car’s value? Can restitutio in integrum be applied?

Held by Court of Appeal

  • Appeal dismissed – the remedy for misrepresentation is rescission so the full purchase price of the car should be reclaimed.

Longmore LJ

Rescission

  • The contract should be rescinded under laches. C only knew rescission was an available remedy based on disclosure of the documents.
  • “The words ‘in lieu of rescission’ must, in my view, carry with them the implication that rescission is available (or was available at the time the contract was rescinded). If it is not (or was not available in law) because e.g. the contract has been affirmed, third party rights have intervened, an excessive time has elapsed or restitution has become impossible, rescission is not available and damages cannot be said to be awarded ‘in lieu of rescission’.” [17]
  • The car company made a negligent misstatement to Mr Salt.
  • “Rescission is prima facie available if ‘practical justice’ can be done. If ‘practical justice’ requires a representor to be compensated for depreciation, it is for the representor so to assert and prove; likewise if the representor asserts that use of the car is to be taken into account, which may well be difficult if the car was as ‘troublesome’ (to use Judge Harris’s words) as this Cadillac was.” [30]

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