Rescission Definition

GLOSSARY

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What does Rescission mean?

The right in equity to rescind is the right of a party to set aside a transaction and to be restored to their former position. It is a remedy for misrepresentation or for common/mutual mistake.

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 secondary obligation on the defaulting party is substituted to pay monetary compensation to the non-defaulting part for the losses sustained by reason of the breach.

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Drafting and negotiating an endeavours obligation—checklist

Drafting and negotiating an endeavours obligation—checklist This Checklist sets out the key issues to be considered when drafting and negotiating an ‘endeavours’ obligation and considers various ways in which an endeavours clause can be restricted in scope. For guidance on ‘endeavours’ obligations, see Practice Note: Reasonable and best endeavours. This Checklist does not address enforceability of ‘endeavours’ obligations and related drafting considerations. For guidance, see Practice Note: Reasonable and best endeavours—Drafting endeavours clauses. An endeavours obligation should only be used where a party’s lack of control or changing circumstances mean that an absolute obligation is not appropriate. If parties insist on including a best endeavours, reasonable endeavours or similar obligation in documentation, they should be aware of the difficulties of interpretation and the consequent uncertainty as to the extent of the liabilities involved. Given the particular uncertainty surrounding an ‘all reasonable endeavours’ obligation, the drafter should consider using either ‘best endeavours’ or ‘reasonable endeavours’. More certainty can be obtained by: • considering the extent of the obligation imposed • setting...

Drafting and negotiating an entire agreement clause—checklist

Drafting and negotiating an entire agreement clause—checklist This Checklist sets out key issues to consider, and provides practical guidance, when drafting and negotiating entire agreement clauses in a business-to-business (B2B) contract. It considers the implications of common law and statutory controls, including the Unfair Contract Terms Act 1977 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967). The purpose of an entire agreement clause is to give the parties certainty that the entirety of the agreement between them is set out in writing and to ensure that any pre-contractual representations, statements, arrangements or discussions will not form part of the agreement they are entering into. Statements are often made by one party to another as part of the pre-contract negotiations (for example as part of a sales process). Disputes can arise around whether, or which, statements are intended to form part of the contract or potentially give rise to other remedies. Depending on the facts, a pre-contractual statement might take legal effect (and give rise to remedies). For more information, see Practice Note: Pre-contractual representations and statements....

Rescission of a contract

This Practice Note considers the remedy of rescission, summarising when and how a contract may be rescinded (at common law, equity and under statute) and thereby brought to an end. It includes the effect of rescission, the main grounds for rescinding a contract (misrepresentation, mistake, undue influence, duress, non-disclosure, fiduciary misdealing and bribery) and the main bars to seeking rescission as a remedy of affirmation, intervention of third party rights and impossibility of restitution.For guidance on rescission in the context of a misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy.There are numerous ways in which a contract can come to an end, see: Terminating contracts—how and when a contract ends—overview for an outline, together with links to the underlying practical guidance, including Practice Note: Termination and expiry of contracts.For a summary, in tabular format, of the key and illustrative judgments handed down since 1 January 2020, considering contract law issues, see Practice Notes:•Contract disputes—key and illustrative decisions (2024)•Contract disputes—key and illustrative decisions (2020–2023)What is rescission of a contract?The remedy of...

Repudiation of contract

This Practice Note concerns repudiation and sets out what a repudiatory breach of contract means. It explains how a repudiatory breach goes to the core of the contract and the options or remedies available to an innocent party as a result of the other party’s repudiation, which include either accepting the repudiatory breach and treating the contract as ended, or affirming the contract. This Practice Note explains the meaning of an anticipatory breach of contract and considers when that may also be a repudiatory breach. Termination for repudiatory breach is a common law right and a complex area of law, well documented with cases. If a party is seeking to terminate a contract for another party’s repudiatory breach the advice is to proceed with caution. It is not a risk-free strategy for termination, and each case should be evaluated on its own facts.Where a party purports to terminate a contract for the repudiatory breach of another party and the circumstances turn out not to amount to a repudiation, the act...

Discover our 206 Practice Notes on Rescission

Joint venture shareholders’ agreement—deadlock (50:50)

Joint venture shareholders’ agreement—deadlock (50:50) This Agreement is made on [insert date] 20[insert year] Parties 1 [Insert name of first shareholder] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] ([A]), 2 [Insert name of second shareholder] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] ([B]), and 3 [Insert name of the company in which the shares are held] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] (the Company). BACKGROUND (A) The Company, at the date of this Agreement, has in issue ordinary shares of £[insert nominal value] each, of which one ordinary share has been issued fully paid and is registered in the name of [A] and one ordinary share has been issued fully paid and is registered in the name of [B]. (B) The Company shall carry on business in accordance with the terms and conditions of this Agreement....

Share purchase agreement—pro-buyer—corporate seller—conditional—long form

Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of selling corporate entity] incorporated in [England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Seller); 2 [Insert name of purchasing corporate entity] incorporated in England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Buyer), and 3 [Insert name of guarantor entity] incorporated in England and Wales OR [insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Guarantor) [(each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in [England and...

Dive into our 113 Precedents related to Rescission

Which limitation period applies if two causes of action are being brought together which have different limitations?

Which limitation period applies if two causes of action are being brought together which have different limitations? Assuming that each cause of action has a distinct statutory limitation period, it would be possible for one cause of action to be time-barred, and therefore fail (or be struck out), whilst other causes of action might survive and ultimately be successful upon disposal of the claim. For example, in Brent London Borough Council v Davies, a complex series of different causes of action were brought against a number of defendants. The Court considered different limitation periods both with respect to the different causes of action and, within the different causes of action, to different elements of loss. However, the position is complicated where the causes of action include equitable claims which do not have an express statutory limitation period. For example, the tort of deceit has a six-year limitation period under section 2 of the Limitation Act 1980 (LA 1980). A claim in equity to rescind a contract for fraudulent misrepresentation,...

A tenant entered into a 12-month AST and the landlord has served a valid section 21 notice terminating the tenancy on the expiry of the term. The tenant entered into the tenancy having been assured by the landlord that they could stay for longer than one year. Does the client have any cause of action or remedy based on estoppel or misrepresentation?

A tenant entered into a 12-month AST and the landlord has served a valid section 21 notice terminating the tenancy on the expiry of the term. The tenant entered into the tenancy having been assured by the landlord that they could stay for longer than one year. Does the client have any cause of action or remedy based on estoppel or misrepresentation? Misrepresentation Misrepresentation is a statement of a fact which is untrue. In order to establish a misrepresentation you must be able to point to the represented words either on the page or electronically, or point to them being said by a certain person, on a certain date. There must be an actual representation or statement. The representation must be a fact, as distinct from a statement of opinion, a statement of intention or a commendatory statement. The representation must be false. The general rule is that, in determining whether there has been an express representation, and to what effect, the court has to consider what a...

See the 80 Q&As about Rescission

Tribunal upholds HMRC’s Fixed Protection revocation, rejecting mistaken payment submissions (Lefort v HMRC)

Pensions analysis: In Lefort v Revenue and Customs Commissioners, the First-tier Tribunal (the FTT) dismissed the appeal by Mr Lefort (the Appellant) against the revocation of his Fixed Protection 2014 (FP 2014) certificate by His Majesty’s Revenue and Customs (HMRC). An FP 2014 certificate allows taxpayers to access the preserved lifetime allowance of £1,500,000 before extra tax is chargeable on their pensions. Eligibility is dependent on pension contributions stopping before 6 April 2014, but the Appellant’s former employer made contributions to the Appellant’s pension after the deadline. The Appellant argued the protection-cessation event in his case was a mistake eligible for rescission, an equitable remedy. The FTT declined to follow Hymanson v HMRC and held that the FTT cannot apply the tax legislation as if the High Court had ordered any equitable remedies. Additionally, the FTT held it has no jurisdiction over HMRC’s discretion not to revoke an FP 2014 certificate after a protection-cessation event, because they only have jurisdiction over the objective question of whether HMRC revoked the FP...

Cruel Intentions—fraud, deceit, and unlawful means conspiracy (4VVV Ltd and others v Spence and others)

Financial Services analysis: On 27 September 2024, Mr Justice Foxton handed down his judgment in which the lead claimants obtained a significant victory in a complex, long running fraud group action claim arising out of a multi-million-pound property investment scheme. The lead claimants were successful in their claims for deceit and unlawful means conspiracy. The lead claimants also obtained a declaration that certain investments were unenforceable under section 26 of the Financial Services and Markets Act 2000 (FSMA 2000) on the basis that they constituted unregulated collective investment schemes. It was the first step in the claimants obtaining redress from the defendants. The judgment, which followed a ten-week trial in the Commercial Court, provides an interesting commentary on deceit and unlawful means conspiracy in the context of fraudulent misrepresentation and FSMA 2000. The judgment also considers a number of practical issues relating to witness evidence and disclosure that litigants must consider when approaching complicated disputes involving fraud. Written by Meera Solanki, associate and Trowers & Hamlins.

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