There will be some cases in which the innocent party suffers a loss that cannot be put right by rescission, even if an indemnity payment is ordered.

Where a party is induced to enter a contract by misrepresentation, they have a right to damages for any loss, unless the misrepresentation is innocent.

Damages for misrepresentation are calculated using the tort measure, rather than the contract measure. Contract damages are designed to put claimants in the position they would have held if the contract had been performed as agreed, so they aim to provide any (foreseeable) financial benefit that successful performance of the contract would have provided.

Tort damages aim to put the claimant back in the position held before the tort was committed (which, in the case of damages for misrepresentation, means the position before the contract was made), by making good any losses caused by the misrepresentation.

It is often said that as a result, tort protects a bad bargain, and contract a good one.

Negligent damages are restricted to those losses which are attributable to the misrepresentation while fraudulent damages may be awarded for all losses which would not have happened but for the wrongful act. As a result, in appropriate circumstances, a claimant may recover substantially more by alleging and proving fraud than relying on negligence.

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