Final answer:
The injured party can rescind a contract if it was established based on fraudulent misrepresentation. Contract rescission restores the parties to their pre-contractual position as if the contract had never been signed, upholding principles of trust and legal obligations.
Step-by-step explanation:
Fraudulent, but not innocent, misrepresentation permits the injured party to rescind a contract. When a party enters into a contract based on false information that was presented as a fact, this constitutes fraud. The injured party, upon discovering the fraud, may choose to void and annul the contract, effectively bringing the legal relationship back to the position as if the contract had never been made. It is important to note that fraudulent misrepresentation is a violation of trust and impairs the obligation of contracts. Rescinding a contract for misrepresentation is meant to abridge the privileges or immunities of citizens or deny due process and equal protection of the laws, which are foundational principles of contract law.