The following Property guidance note provides comprehensive and up to date legal information covering:
The term rescission is used to describe two very different remedies:
rescission ab initio, and
rescission for breach (or more accurately discharge by breach)
Rescission ab initio is where the contract is treated as if it never existed. This remedy is available:
where the contract was entered into on the basis of a common/mutual mistake, or
where a misrepresentation by one party induced the other to enter into it.
Damages are available only in exceptional cases. There must have been a misrepresentation and the court must conclude that damages are required in lieu of rescission to avoid hardship to the party who was induced by that misrepresentation to enter into the contract.
The recent of case of Bainbridge confirmed that rescission ab initio will still be available even where the property transferred has been disposed of.
Rescission for breach is available where one party accepts the other's repudiatory breach. A repudiatory breach is where a party fails or refuses to perform an essential or fundamental term of the contract and is taken to have decided to set the contract aside. The party who is not in breach can elect to continue the contract, claiming damages for the breach, or to accept the repudiatory breach and to treat the contract as at an end. Both parties are discharged from further performance of the contract. A
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