Contract; vitiating circumstances; misrepresentation; restitutio in intergrum; special circumstances.
Facts: During negotiations for the sale of his fruit-selling business, Alati told Kruger that, on average, he took £100 each week. Kruger relied on this information and bought the business, but in fact his takings never reached £100 per week. When he investigated, Kruger found that the takings for the nine weeks before he took over the business were less than £100 per week. Three weeks later Kruger notified Alati that he wanted to avoid the contract on grounds of Alati's fraud. Kruger began proceedings to recover the purchase price he had paid. Despite taking this action, Kruger continued to run the business until it failed.
Issue: Was Kruger entitled to avoid the contract when he could no longer restore the business to the seller?
Decision: Kruger was entitled to avoid the contract and recover the purchase price.
Reason: The court held that it would be unfair to deprive Kruger of the remedy he wanted, even though he was no longer in a position to restore the operating business he had taken over from Alati. Equity allows a contract induced by fraud to be avoided even if precise restitution is impossible, as long as practical justice between the parties is possible. Because the deterioration and failure of the business was not Kruger's fault, and because Alati had taken no action to help prevent this from happening, Kruger could avoid the contract even though restoration of an operating business was no longer possible.