Bars to Recission

Question 1

What are the bars to rescission

Answer 1

1. When the contract is executed
2. When the misrepresentee affirms the contract with full knowledge of his misrepresentation and of his right to rescind
3. When there is delay in seeking relief
4. When it is substantially impossible to return the parties to their original position
5. Where there are third party rights. Rescission will not be available where there is a bona fide purchaser for the value without notice

Question 2

When the contract is executed

Answer 2

• Rescission in generally not available because Fraud would be needed
• Known as the rule in Seddon v North Eastern Salt.
• Rule does not apply to contracts which fall under s.44
  of the Sale of Good and Supply of Services Act 1980.
• So, sale of goods, hire purchases, supply of services

Question 3

Affirmation

Answer 3

Full knowledge of the misrepresentation and aware of their right to rescind, but nonetheless affirm the contract, the misrepresentee loses there right to rescind.
However damages are still available.

Question 4

Delay

Answer 4

Rescission is an equitable belief and so it must be sought without delay. Delay is seen as a type of affirmation of the contract.

Question 5

Leaf v International Galleries

Answer 5

Issue: Delay
Application: Painting innocently represented to be by constable. 5 years before, the owner found out it was not. Made no effort in the interim to verify the painting. Claim for rescission rejected due to delay.

Question 6

Restitution is Impossible

Answer 6

• Rescission will be refused
  ‘If you are fraudulently induced to buy a cake, you
  may return it and get back the price; but you cannot
  both eat your cake and return your cake.’ [Clarke v
  Dickson]
• 100% restitution is not required

“rescission will only be granted where a true
restoration to the original position can be attained or
can be attained to such an extent that no injustice will
be suffered.”

• Carbin and Sommerville is an example of this

Question 7

Third party rights

Answer 7

If rescission would prejudice a third party’s rights it may be refused

Question 8

Anderson v Ryan

Answer 8

Issue: Third party rights
Application: Davis responded to a newspaper ad offering a car for sale. Davis and he con-artist swapped their cars. No money was exchanged. The other was in fact stolen. Davis was dispossessed of the stolen car by the Gardai. Later is car was returned to him. It had been sold twice since, currently owned by P who bought it in good faith.
Held: when the car was sold to the con-artist voidable (not void) title passed. The contract was not voided before the innocent third party bought the car and acquired rights over it.
Could not rescind and recover the car from the third party.

To make a voidable contract void - communication of the fraud to the Gardai will suffice