## Facts

- Redgrave, a solicitor, sought to take on Hurd as a partner and to sell him his legal practice and property.
- Redgrave represented that the business generated approximately £300 per year, though actual income was around £200.
- Redgrave supplied financial summaries indicating £200 annual income. When Hurd queried the figures, Redgrave presented further papers, claiming they made up the shortfall, but these did not actually support the higher income.
- Hurd did not fully examine these papers.
- Upon Redgrave seeking specific performance of the contract, Hurd sought rescission on the ground of misrepresentation regarding the practice’s value.

## Issues

1. Whether an innocent misrepresentation made by the representor entitles the representee to rescind the contract.
2. Whether the representee’s failure to investigate or discover the truth (i.e., negligence) precludes rescission for misrepresentation.
3. Whether there is a legal presumption of reliance on a material representation and who bears the burden of proof.
4. Whether the facts supported that Hurd was induced to contract by Redgrave’s misrepresentation.

## Decision

- The Court of Appeal held that even an innocent misrepresentation is sufficient to entitle the induced party to rescission of the contract.
- The representee’s negligence or failure to investigate the truth of the representation does not defeat the right to rescind.
- There is a presumption that a party was induced by a material misrepresentation, and the burden lies on the representor to rebut this presumption.
- Since Hurd relied on Redgrave’s statement, rescission was allowed.

## Legal Principles

- A party may rescind a contract for innocent misrepresentation; fraud is not required for rescission.
- Negligence of the representee in verifying statements does not prevent rescission.
- Material misrepresentations are presumed to have induced the contract unless the representor proves otherwise.
- Active misrepresentation is treated differently from mere silence or failure to dispel a pre-existing mistake by the other party.
- Intentional deceit (as defined in Derry v Peek) is not necessary for rescission, but is necessary for damages for the tort of deceit.
- Rescission requires that the contract’s subject matter can be restored to its pre-contractual state, and may be lost by lapse of time or impossibility of restitutio in integrum.

## Conclusion

Redgrave v Hurd clarified UK contract law by confirming that rescission is available for innocent misrepresentation even if the representee failed to investigate the truth, shifting the focus to the representor’s conduct and presuming reliance where a material misstatement is made.


Redgrave v Hurd (1881) 20 Ch D 1