In Redgrave v Hurd, the plaintiff contracted to purchase a house attached to a solicitor’s business in reliance upon a non-fraudulent misrepresentation as to its profitability. Although, today, it would be difficult to argue that there was any form of reasonable reliance upon the misrepresentation sufficient to give rise to an action in tort, it remains the case that it was the defendant’s mis-statement which led the plaintiff to believe that he was buying a more profitable business than in fact was the case. In these circumstances, to allow the defendant to keep the purchase price might be seen to involve an unjust enrichment, which was reversed by an order for rescission of the contract, which included the return of a £100 deposit: Redgrave v Hurd (1881) 20 Ch D 1, CA, p 12

doi:10.4324/9781843141518-284

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In Redgrave v Hurd, the plaintiff contracted to purchase a house attached to a solicitor’s business in reliance upon a non-fraudulent misrepresentation as to its profitability. Although, today, it would be difficult to argue that there was any form of reasonable reliance upon the misrepresentation sufficient to give rise to an action in tort, it remains the case that it was the defendant’s mis-statement which led the plaintiff to believe that he was buying a more profitable business than in fact was the case. In these circumstances, to allow the defendant to keep the purchase price might be seen to involve an unjust enrichment, which was reversed by an order for rescission of the contract, which included the return of a £100 deposit: Redgrave v Hurd (1881) 20 Ch D 1, CA, p 12

ABSTRACT

Redgrave v Hurd (1881) 20 Ch D 1, CA, p 12 Jessel MR: As regards the rescission of a contract, there was no doubt a difference between the rules of courts of equity and the rules of courts of common law – a difference which of course has now disappeared by the operation of the Judicature Act, which makes the rules of equity prevail. According to the decisions of courts of equity it was not necessary, in order to set aside a contract obtained by material false representation, to prove that the party who obtained it knew at the time when the representation was made that it was false. It was put in two ways, either of which was sufficient. One way of putting the case was, ‘A man is not to be allowed to get a benefit from a statement which he now admits to be false. He is not to be allowed to say, for the purpose of civil jurisdiction, that when he made it he did not know it to be false; he ought to have found that out before he made it’. The other way of putting it was this: ‘Even assuming that moral fraud must be shewn in order to set aside a contract, you have it where a man, having obtained a beneficial contract by a statement which he now knows to be false, insists upon keeping that contract. To do so is a moral delinquency: no man ought to seek to take advantage of his own false statements.’ The rule in equity was settled and it does not matter on which of the two grounds it was rested. As regards the rule of common law, there is no doubt it was not quite so wide. There were, indeed, cases in which, even at common law, a contract could be rescinded for misrepresentation, although it could not be shewn that the person making it knew the representation to be false. They are variously stated, but I think, according to the later decisions, the statement must have been made recklessly and without care, whether it was true or false, and not with the belief that it was true. But, as I have said, the doctrine in equity was settled beyond controversy, and it is enough to refer to the judgment of Lord Cairns in the Reese River Silver Mining Co v Smith, in which he lays it down in the way which I have stated.