rescission
A party may rescind (cancel) a contract in several situations: when it is voidable for coercion, undue influence, fraud or misrepresentation (ss.19 and 19A, Indian Contract Act, 1872); when the other party breaks a condition or refuses to perform (s.39); or by mutual agreement (s.62). Rescission is communicated and revoked in the same way as a proposal (s.66), and a person who rightly rescinds is entitled to compensation for loss (s.75).
On rescission each party must restore the benefit received (s.64). The court may also decree rescission of a written contract under s.27 of the Specific Relief Act, 1963, but it may refuse if the plaintiff has affirmed the contract, if restoration is impossible, or if third parties have acquired rights in good faith for value. Distinguish rescission (the contract is undone) from termination for breach (future obligations end, accrued rights stay).
Example
On discovering the seller's fraud, the buyer rescinded the contract and, under s.64, returned the car in exchange for the price.
In Indian law
- Sections 19, 19A, 39, 62, 64, 66 and 75, Indian Contract Act, 1872
- Section 27, Specific Relief Act, 1963
See also
voidable contract · restitution · fraud · misrepresentation
Read more in the study notes
- Administrative discretion and its judicial review (Administrative Law)
- Proof of documents, public and private documents, presumptions as to documents, and exclusion of oral by documentary evidence (sections 64 to 103) (Bharatiya Sakshya Adhiniyam)
- Promoters: position, duties and liabilities (Company Law)
- Prospectus: contents, kinds and liability for misstatement (Company Law)
- Minor's agreements (Contract I)
- Misrepresentation and fraud (Contract I)