Innocent misrepresentation occurs when a party makes a false statement that they believe to be true but is actually incorrect. This is different from fraudulent misrepresentation, where the party making the statement knows it is false.
Key Characteristics:
* False statement: The statement made must be demonstrably untrue.
* Belief in truth: The person making the statement genuinely believes it to be accurate, even though it isn't.
* No intent to deceive: There's no deliberate attempt to mislead the other party.
* Materiality: The misrepresentation must be significant enough to influence the other party's decision.
Examples:
* A seller tells a buyer a used car has 50,000 miles on it, but the seller believes this based on the odometer, which is inaccurate.
* A homeowner tells a potential buyer that the roof was recently replaced, but they mistakenly remember the date and it was actually five years ago.
Consequences:
Innocent misrepresentation can lead to the contract being rescindable by the wronged party. This means the contract can be canceled, and both parties are returned to their original positions. However, the innocent party typically cannot seek damages for financial loss or other harm caused by the misrepresentation.
Distinction from Negligent Misrepresentation:
Innocent misrepresentation is often compared to negligent misrepresentation. Negligent misrepresentation occurs when the party making the statement should have known, or reasonably could have known, that the statement was false. In this case, the party may be liable for damages, even if they didn't intend to deceive.
In summary:
Innocent misrepresentation is a type of misrepresentation where the party making the false statement acts in good faith, believing it to be true. While it can lead to the contract being rescinded, it generally does not result in damages for the innocent party.