Remedies for misrepresentation in applications in the presence of fraudulent intent

Charles North

Atlantic Economic Journal, 2001, vol. 29, issue 2, 162-176

Abstract: Many contracts are based upon information provided in written applications, including insurance and employment contracts. However, the remedies used in these two contexts for material misrepresentation in the application differ. Insurers use the remedy of rescission and restitution, which returns the parties to status quo ante. Employers simply terminate the contract, leaving the parties where they are at the time of termination. This paper examines the role played by each remedy in the context of intentional misrepresentation. It is shown that rescission and restitution expands the situations in which mutually beneficial contracting will occur. It is also shown that insurers can offer lower premiums when the remedy of rescission and restitution is available. Copyright International Atlantic Economic Society 2001

Date: 2001
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DOI: 10.1007/BF02299135

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