Rescission

Question 1

Recession occurs when

Answer 1

the parties want to cancel or void the contract
+
return to original state before the contract was formed

Question 2

Does a contract have to be vaild for recession?

Answer 2

no

Question 3

In order to invoke the rescission remedy at law a party mus

Answer 3

be prepared to tender back what they have recieved

Question 4

Grounds for rescission

4

Answer 4

1. Misrepresentation
2. Mistake
3. Substantial Breach
4. Other

Question 5

a plaintiff may seek rescission of a contract only when the breach is deemed

Answer 5

substantial

Question 6

the plaintiff may seek rescission for innocent misrepresentation but must show two elements to rescind:

Answer 6

1. innocent misrepresentation was material to the contract; and,
2. πreasonably relied upon misrepresentation

Question 7

Fraudulent misrepresentation occurs when

Answer 7

∆ intends to deceive π

Question 8

When fraudulent misrepresentation has occurred, what can πdo?

When innocent misrepresentation has occurred, what can πdo?

Answer 8

Fraud = damages or rescission

Innocent = only rescission

Question 9

The elements to establish rescission for mutual mistake are

4

Answer 9

1) Both parties are mistaken to a fact underlying the contract
2) The mistaken fact was a basic assumption
3) The mistaken fact adversely affected the party seeking recision

4) The party seeking rescission did not assume the risk for the mistake. A party may assume the risk of a mistake in one of two ways:
a) express terms of contract
b) had means to discover the truth but did not

Question 10

Two types of misrepresentation that allow for rescission?

2

Answer 10

1. innocent

2. fraudulent

Question 11

A court may grant rescission for unilateral mistake if these elements are present:
(3)

Answer 11

1. mistake involves a basic assumption underlying the contract
2. the πwill suffer extreme hardship and ∆is not prejudice
3. ∆ knew of π’s mistake and continued anyway

Question 12

Two types of mistake that allow for recession?

Answer 12

1. mutual mistake

2. unilateral mistake

Question 13

Substantial breach occurs when?

Answer 13

The breach goes to a vital provision of the contract

Question 14

Other bases for recession of contract?

6

Answer 14

1. illegality of contract
2. lack of capacity
3. duress
4. undue influence
5. failure of consideration
6. impossibility of performance