Remedies: Rescission

Question 1

What is “rescission”?

Answer 1

“Rescission” = a remedy whereby the original K is considered voidable and rescinded.

Parties are left as though a K had never been made

Question 2

When must the grounds for rescission arise?

Answer 2

The grounds for rescission must arise either BEFORE or AT THE TIME a K is made

Question 3

What are the grounds for rescission?

Answer 3

1. mutual mistake of material fact
2. unilateral mistake IF the other party knew or should have known of the mistake
3. unilateral mistake IF the hardship by the mistaken party is so extreme it outweighs the party’s expectations under the K
4. misrepresentation of fact or law by either party as to a material fact in the negotiations that was relied upon
5. other grounds –> duress, undue influence, illegality, lack of capacity, failure of consideration

Question 4

What defenses are available for rescission?

Answer 4

All equitable defenses are available in a rescission case

Examples –> laches, unclean hands

NOTE: P’s negligence is not a defense

NOTE: if P has paid money to D, he may be entitled to restitution in addition to rescission