Recission Reformation and Restitution

Question 1

Recission

Answer 1

• a cancellation of a contract
• parties are treated as though it had never been made

Question 2

Reformation

Answer 2

• treats the contract as valid, and
• changes a writing setting forth or implementing the agreement to conform to the originally intended agreement

Question 3

What triggers recission/reformation

Answer 3

• Often arise in same fact pattern.
• Mistake triggers both these remedies

Question 4

Recession elements

Answer 4

• Must have been present at the time of formation:

1. mutual mistake as to a material fact, or
2. unilateral mistake coupled with misrepresentation (even if innocent), or some other form of inequitable conduct
3. other grounds like duress, undue influence, lack of capacity, or failure of consideration may also justify recission. The claimed basis of recission must be clear before trial

Question 5

Recission Alternative theories

Answer 5

• recovery of damages for fraud and recission of the agreement on the basis of this same fraud are mutually exclusive alternative remedies.
• So, can’t sue under law for fraud and for recission.

Question 6

Restitution and recission

Answer 6

• restitutionary relief is also generally granted with recission.
• no longer required in Virginia that parties deposit all consideration received.
• if recission granted, restitution granted as well

Question 7

Reformation Elements

Answer 7

must already have a valid contract.

1. any mutual mistake, or. e.g. scrivener’s error.
2. unilateral mistake coupled with a knowing misrepresentation.

Question 8

Effect of reformation

Answer 8

It is a powerful remedy because it penalizes the lying party and enforces the correct agreement for the duped party.

Question 9

Reformation and SoF

Answer 9

• SoF will not bar reformation.
• But, since proving a knowing misrepresentation, must prove by clear and convincing evidence.

Question 10

When restitution is available

Answer 10

• available when the defendant obtains a benefit from the plaintiff, and
• upon request of defendant or under certain circumstances showing that the defendant should have known that plaintiff expected recompense for the benefit he gave to the defendant.
  
  • typically involves a gift vs. actionable transfer of access

Question 11

Restitution Restrictions

Answer 11

• A person cannot sue just because they didn’t receive benefit for effort. Benefit and expectation must be showed
• Should the defendant have known the plaintiff was expected to be paid?

Question 12

Alternative to restitution

Answer 12

Alternatively, plaintiff can make a legal claim in implied contract

Question 13

4 types of restitution remedies

Answer 13

1. dollar damages awards
2. constructive trust
3. equitable liens
4. specific restitution

Question 14

constructive trust

Answer 14

• if the defendant wrongfully took plaintiff’s property, and
• it can be traced to some asset defendant still has,
• then court can claim that plaintiff is holder of the asset and defendant holds it in trust.

Question 15

equitable liens

Answer 15

• if the defendant used plaintiff’s money to improve that property, plaintiff can assert a lien on that property.
• equitable lien on realty must be in writing

Question 16

specific restitution

Answer 16

• Plaintiff can get specific items of property wrongfully obtained by defendant
• Asset cannot be commingled.