Final answer:
In contexts of innocent misrepresentation, rescission is not a remedy in cases of mistake, undue influence, or illegality. These are separate issues from misrepresentation and involve contexts where a contract might be voided or set aside for reasons aside from misrepresentation.
Step-by-step explanation:
The question relates to scenarios where innocent misrepresentation has occurred but does not warrant the remedy of rescission. Innocent misrepresentation is a false statement made by a party that believed it to be true at the time it was made, without any intent to deceive the other party. It is distinguishable from fraud, which involves intentional deception. Rescission is a remedy that invalidates a contract, allowing the parties to return to their respective positions prior to the agreement. However, not all cases of misrepresentation permit rescission.
The correct answer to the given question is B) Mistake, undue influence, illegality. Here’s why each option doesn’t permit rescission in the case of innocent misrepresentation:
Mistake occurs when both parties hold an incorrect belief about a fundamental fact at the time of contract formation. If the mistake is mutual and material to the contract, it may be grounds for rescission, but not because of misrepresentation.
Undue influence involves improper pressure or influence that deprives a person of their free will in making a decision. While it could lead to a contract being set aside, it is a separate issue from misrepresentation.
Illegality means that the subject or purpose of the contract is unlawful. A contract that involves illegality is void from the outset and unenforceable, so rescission would not typically apply as there's no valid contract to rescind.