Understanding Rescission and Its Legal Implications
Rescission is a legal remedy where a court cancels a contract and orders exchanged items to be returned. It can be invoked in cases of material breach, impracticability, frustration, mistake, or misrepresentation. This article explores the concept of rescission, its criteria under common law and UCC, and its significance through a practical scenario involving a real estate contract. Additionally, it discusses alternative remedies such as expectation damages, mitigation, specific performance, and restitution.
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Presentation Transcript
Recission Richard Warner
Rescission What is rescission? The court orders the contract canceled and any exchanged items returned. When can you get it? Common law: It must be available and equitable Rescission is available when there has been a material breach--or impracticability, frustration, mistake, or a material misrepresentation (innocent negligent or intentional). UCC: 2-508 (and 2-612).
Why Rescission? Victoria and Victor have a contract for Victor to buy Victoria s house. After they enter the contract, Mason offers Victoria twice what Victor is paying. Then Victor breaches the contract by not depositing the escrow money in time. (a) If Victor does not buy and Victoria sells to Mason, her expectation damages would be $0 (more or less). (b) If Victoria can rescind the contract with Victor, she can sell to Mason without any remaining obligations to Victor. (c) (a) and (b).
Expectation /Mitigation Money damages inadequate (perhaps the result of proof problems) Proof problems (but money damages adequate) Specific Performance Reliance Return items equitable? Material breach (or other) requirement Restitution Rescission
