Section 2(1) of the 1967 Act provides, in principle, that damages may be awarded even for an
innocent misrepresentation, unless the party making it reasonably believed that the facts represented were true; and section 2(2) provides, broadly, that where a non-fraudulent misrepresentation gives an entitlement to rescission, and the court considers that it would be equitable to award damages in lieu of rescission, it may do so.
rescission in
innocent misrepresentation cases, Part I shows how
Innocent misrepresentations are misrepresentations which the vendor honestly believes to be true.
Certain states do not require knowledge of a misrepresentation in order to rescind a policy, and an
innocent misrepresentation is enough to void coverage.
In these states, a policy can be rescinded for an
innocent misrepresentation or concealment of a material fact.
Cowan says the second case is one of
innocent misrepresentation.
As to those kinds of questions, insureds are viewed as being asked only for opinions, not facts.(67) The implicit qualifications in these questions have the effect of disallowing avoidance for an
innocent misrepresentation, even when state law purports to allow such action.