V. Specific Requirements for Rescission and Reformation

Question 1

Generally

Answer 1

• RESCISSION: a voidable K is put to an end and parties treat as if it isn’t made
• REFORMATION: treats k as valid and changes a writing setting forth or implementing agreement to conform to originally intended agreement

Question 2

Obtaining Rescission

Answer 2

Equity will rescind a contract if, AT THE TIME IT WAS ENTERED INTO, there was

1. Mistake (mutual)
   
   1. unilateral mistake will usually not suffice unless it is known to the other party or would creat hardship to the mistaken party
2. Misreresentation (of fact)
3. Other Grounds: duress, undue influence, lack of capacity or failure of consideration

Negligence is usually not a defense to rescission. Recovery of damages for fraud & rescission of the agreement on the basis of this same fraud are mutually exclusive alternative rememdies

Usually must be material

If rescinded, restitituion gnerally available to reocver any value exhchanged prior to rescission

Question 3

Obtaining Reformation

Answer 3

Requires there be a valid contract. Some exampels

1. Mutual mistake of essential issue (can be fact or law)
2. Unilateral mistake coupled with fraud
3. Negligence misrepresentation

Parol evidence may be used to show the agreement

Negligence and statue of frauds are non defenses