If a contract is made as a result of fraud on the part of one party, i.e. a fraudulent misrepresentation, the injured party may rescind the contract and also party may rescind the contract and also obtain damages.
To be fraudulent, the misrepresentation must be made either with an attempt to deceive or without caring whether the statement was true or false. It should be a statement of fact (though in Derry v. Peek the judge commented that a man’s opinion was as much a fact as the state of his digestion). Fraud is an offence in tort as well as in contract. Remedies of the injured party are: (1) to affirm the contract and sue for damages in tort for deceit; (2) to rescind with or without seeking damages in tort.
He may still be able to sue for damages if he has lost his right to rescind, due perhaps to the acquisition of rights by a third party.
Reference: The Penguin Business Dictionary, 3rd edt.