Balog v Crestani

The High Court of Australia considered an appeal from a judgment of the Supreme Court of South Australia in *Balog v Crestani*. The dispute concerned the validity of a contract for the sale of land, where the purchaser, Mr Crestani, alleged that the vendor, Mr Balog, had made fraudulent misrepresentations inducing him to enter into the agreement. Mr Crestani sought to have the contract rescinded.

The central legal issues before the High Court were whether the representations made by Mr Balog constituted fraud in law, and if so, whether Mr Crestani had affirmed the contract after becoming aware of the misrepresentations, thereby losing his right to rescission. The court also had to consider the nature of the alleged misrepresentations and their impact on Mr Crestani's decision to purchase the property.

The High Court found that the representations made by Mr Balog were indeed fraudulent. However, the court determined that Mr Crestani, by his conduct after discovering the truth of the matter, had affirmed the contract. His continued occupation of the property and his actions in seeking to sell it, rather than immediately seeking rescission, demonstrated an intention to be bound by the agreement. The legal principle applied was that a party seeking rescission for fraud must act promptly upon discovering the fraud and cannot, through their conduct, indicate an intention to proceed with the contract. Consequently, the High Court allowed the appeal, setting aside the order for rescission.