Rescission CASES

In English law, rescission is a remedy allowing parties to cancel or set aside a contract, returning them to their pre-contractual positions, typically due to misrepresentation, undue influence, or other factors undermining genuine consent.

Definition and Principles

Rescission terminates the contractual obligations of both parties, effectively treating the agreement as though it never existed, provided rescission is exercised promptly and fairly.

Grounds for Rescission

  • Misrepresentation: False statements inducing a party into a contract.
  • Duress or Undue Influence: Improper pressure or influence.
  • Mistake: Fundamental errors affecting the contract’s substance.
  • Unconscionability: Significantly unfair or oppressive terms.

Bars to Rescission

  • Affirmation: Continued acceptance after discovering grounds for rescission.
  • Delay: Unreasonable delay in seeking rescission.
  • Third-party rights: If third parties have acquired rights in good faith.
  • Impossibility of restitution: When parties cannot revert to original positions.

Practical Importance

Rescission ensures fairness and integrity in contractual relationships, protecting parties from unjust obligations created under compromised circumstances.

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Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] UKHL 11 (14 February 1980)

Wimpey sought to rescind a land purchase contract by invoking a contractual clause regarding compulsory acquisition. The purported rescission was held unjustified as the compulsory purchase procedure had begun before the contract date. The House of Lords held this did not constitute repudiation as Wimpey had genuinely, though mistakenly, believed...

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Long v Lloyd [1958] EWCA Civ 3 (19 May 1958)

Mr Long purchased a lorry from Mr Lloyd after misrepresentations about its condition, including that it was in first-class condition and could achieve 40mph and 11 miles per gallon. After discovering defects, Long sought rescission. The Court held that even if rescission for innocent misrepresentation survived completion, Long had lost...

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Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] EWHC 221 (Comm) (26 January 2000)

The Government of Zanzibar purchased an executive jet aircraft from British Aerospace, alleging misrepresentations about its airworthiness and reliability. The court dismissed the main action for delay and abuse of process, holding that issuing writs at limitation's end without readiness to proceed was impermissible. The judgment clarified that damages under...

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Cooper v Phibbs [1867] UKHL 1 (31 May 1867)

The appellant agreed to lease a salmon fishery from respondents, believing they owned it. In fact, the fishery belonged to the appellant himself under earlier settlements. The House of Lords held the agreement should be set aside for common mistake, but subject to the appellant compensating the respondents for improvements...

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Lever Bros Ltd v Bell [1932] AC 161, [1931] UKHL 2

Bell and Snelling, appointed to manage the Niger Company by Lever Brothers, secretly engaged in cocoa speculation breaching their duties. When their service agreements were terminated with substantial compensation, Levers later discovered the misconduct and sought to rescind the settlement agreements. The House of Lords held the agreements were not...

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Attwood v Small [1838] UKHL J60 (March 1838)

Facts The appellant, Mr. Attwood, agreed to sell his extensive ironworks and coal mines at Corngreaves, Staffordshire, to the respondents, John Small and others, for the sum of £600,000. During the negotiations, Attwood made various statements and representations concerning the property’s costs, output, and earning capacity. The prospective purchasers (the...