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I don't grok the emboldened hypothetical. I simplified the math in the title; dividing prices by 1000 doesn't transmogrify factual pattern.

If car = 3K if of the age repesented, then Alex got a bargain of 500 = (3 – 2.5)K.

  1. Thus why would Alex get "an award of £800 (£3,000 less the £2,200 value of the car received)"? Alex wouldn't get anything!

  2. Where's his contractual loss of bargain rather than returning each party to their starting positions"?

Prof Richard Taylor, Damian Taylor. Contract Law Directions (6 edn, 2019). p 189.

Damages in lieu of rescission

Alex buys a car from Phillippa for £2,500, but due to a misrepresentation about the car’s age, the car is only worth £2,200. If Alex rescinded, he would return to Phillippa the car worth £2,200 and get his £2,500 back from Phillippa. So he has his £2,500 back in his hands.

If the court decides to award damages in lieu of rescission under s.2(2), such damages would have to achieve the same result. Since no rescission is being ordered, Alex keeps the car worth £2,200 so he needs another £300 to bring him up to the £2,500 he could have got under rescission. What these damages should not cover, however, is any other items of loss, for example suppose Alex has purchased £100 of accessories which only fit models of the year he thought he was purchasing and which are now useless to him. Such losses would have been left equally uncompensated if rescission plus indemnity had been awarded and they can only be recovered if Alex establishes some other right to damages, for example under s.2(1), which is considered later. Similarly, if the car would have been worth £3,000 if of the age represented, there should be no question of getting an award of £800 (£3,000 less the £2,200 value of the car received) since that would be to give him his contractual loss of bargain rather than returning each party to their starting positions. To gain such loss of bargain damages, Alex would have to prove that the age of the car was a term, not just a representation and that there was therefore a breach of contract.

  • Why do you not read through your quotations before posting? The last sentence is a direct answer. – Tim Lymington supports Monica Nov 4 at 10:00
  • Could you clarify what s.2(1) and s.2(1) mean? If those are statutes, posting the links or language of those specific excerpts will help us make sense of the author's assertions. Also, I don't understand the [lexical] semantics of your question #2: "Where's his contractual loss rather than [...]?" – Iñaki Viggers Nov 4 at 11:04
  • @TimLymingtonsupportsMonica "The last sentence is a direct answer". I highly doubt it. The author's attempt to distinguish between term and representation makes no sense. A representation can induce a party to enter the contract, whence the counterparty's failure to deliver the item as represented constitutes breach of contract. – Iñaki Viggers Nov 4 at 11:05
  • @IñakiViggers: Whether the author is correct or not makes no diiference to the question asked. That is the author's belief, which is his justification for the opinion expressed. – Tim Lymington supports Monica Nov 4 at 11:23
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    But as the passage explains, if the age of the car was only a representation, he can't actually expect to be awarded £800, since an award of only £300 will put him back where he started. – Nate Eldredge Nov 4 at 14:24
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Its the difference between two different causes of action

Facts

  • Phillipa says she is selling a 2003 Super-X car
  • The market value of a 2003 Super-X is £3,000
  • Alex and Phillipa agree on a price of £2,500 and complete the transfer
  • The car is actually a 1999 Super-X
  • The market value of a 2003 Super-X is £2,200

Question: Is the error (1999 vs 2003) a misrepresentation or a term of the contract?

Misrepresentation

It is clearly misrepresentation and this gives Alex grounds to sue. His remedies for misrepresentation are:

  • Recision of the contract: Alex gets his £2,500 back and Phillipa gets the car back, or
  • Damages for his loss. He gets £300 (£2,500 - £2,200) keeps the car and Phillipa keeps the balance of the money.

Misrepresentation restores you to the position you would have been in if the contract had not happened

Breach of contract

If Alex can prove that the misrepresentation was more than a pre-contractural statement that induced him to enter the contract, that is, he can show that the year of the car is actually a term of the contract, then he can sue for breach of contract. His remedies for breach of contract are:

  • Recision (as above) plus damages based on his expectation of profit from the contract. Alex gets his £2,500 plus the £500 profit he expected; Phillipa gets the car back, or
  • Damages based on his expectation of realizing £3,000. He keeps the car (worth £2,200) and Phillipa pays him the £800 difference between that and the value of the car.

Breach of contract puts you into the position you would have been in if the contract had been completed without the breach

TL;DR

Not all legal remedies are equal. The same fact pattern may give different grounds for action - some are better than others.

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