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Contract: Misrepresentation and Economic Duress

Rescission and the bars to rescission

  • 3 things to know
  • Components 2 and 3

Overview

Bar of impossibility of restitution and relationship between rescission and damages.

What you need to know

Answer each one before you reveal it.

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Key term

What is rescission?

Key term

Is rescission available as of right?

Key term

How is a contract rescinded?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is rescission?

    Model answer

    Rescission unwinds the contract and restores the parties to their pre-contract positions. Property and money transferred under the contract must be returned.

  2. 2

    Is rescission available as of right?

    Model answer

    Rescission is an equitable remedy and is therefore discretionary. A court may refuse rescission where damages in lieu are more appropriate.

  3. 3

    How is a contract rescinded?

    Model answer

    Rescission is usually effected by giving notice to the other party. Court proceedings are not always necessary for the remedy to take effect.

  4. 4

    What did Car and Universal Finance Co v Caldwell [1965] decide about notice?

    Model answer

    Car and Universal Finance Co v Caldwell [1965] allowed rescission where the fraudster could not be found. Telling the police and the motoring organisations was sufficient to communicate the decision.

  5. 5

    How does affirmation bar rescission?

    Model answer

    A party who confirms the contract after learning the truth loses the right to rescind. Affirmation may be shown by words or by continuing to take benefits.

  6. 6

    Which case illustrates affirmation of a contract?

    Model answer

    Long v Lloyd [1958] concerned a lorry buyer who accepted a contribution to repairs and continued using it. The buyer had affirmed the contract and could no longer rescind.

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