Q 4.
What are the principle and procedure for Rescission (Cancel)
of Contract? Explain.
1. Introduction
If a party to a contract commits a breach the aggrieved party has a remedy of
Rescission. He can cancel the contract. It means that party can withdraw the contract. In
this way party can free himself from all the obligations of the contract.
The main aim of rescission of contract is to put an end of the contract and bring back
the parties to their original position. If the Court has not allowed the specific
performance of the contract, it may allow the party to withdraw from the contract
2. Relevant Provisions
Section 25 to 38 of specific relief act deals with the rescission of the contract.
3. Meaning of Rescission
Rescission means to avoid, withdrawal or cancellation.
4. Definition of rescission
There are a number of reasons when contract is cancelled by the court order and it is
done to bring back the parties to the position in which they were before formation of
the contract
5. Application of Rescission
Rescission is not applicable to the contracts which are not enforceable by the law but is
applicable to the contracts which are enforceable by the law.
6. Grounds for rescission
Following are the grounds of rescission of the contract. Details are as under.
1. Mistake of Law
A mistake of law occurs when a party to the contract knows the facts but ignores the
mistake in this case the contract can be rescinded.
2. Unlawful contract
If contract is against the law it will be unlawful in this case the contract can be rescinded
3. Against Public interest
If contract is against public interest it will be unlawful in this case the contract can be
rescinded
4. Fraud or undue influence
If a contract is formed by fraud or by undue influence in this case the innocent party can
rescind the contract with the help of court
5. Failure of consideration
A party to a contract can also rescind a contract on the failure of the other party to
provide “consideration" for their agreement. A refusal or failure of a party to perform
his obligation of the contract, or a clear intention to violate it, gives right to other party
to rescind.
7. Cases when rescission can be declared
Following are the cases when rescission is declared.
1. When the contracts is voidable by the party.
Where the contract is voidable by the plaintiff, the rescission can be declared by the
court of law on the request of party.
Example
A sells a field to B. There is a right of way over the field but A conceals the facts
from B and have a knowledge of this fact, in this case B can rescind the contract
2. When the contract is unlawful
When any unlawfulness arises within the contract in this case the party can rescind the
contract.
Example
A, an attorney convinces his client B that is a Hindu widow to transfer property to
him for purpose of defrauding her.in this case B can rescind of the contract.
3. Default in the payment
When purchaser does not pay the money to the vendor and makes default in the
payment of purchase in this case the vendor can sue for the rescission of the contract
4. Alternative prayer for rescission
A plaintiff suits for the specific performance of a contract but the contract is not
specifically enforced, in this case contract may be rescinded, if it refuses to enforce the
contract specifically,
8. Court may require party rescinding to do equity:
On adjudging the rescission of a contract, the court may require the party to whom such
relief is granted to make any compensation to the other which justice may require.
9. When Rescission is Not Available
There are situations where rescission is not available as a remedy, because the decision
is at the discretion of the court. A judge may deny rescission based on following certain
facts.
When one party has fulfilled their obligation of the contract
When A third party has already received some benefits from the contract
The requesting party has committed some wrong relating to the contract
The requesting party has unnecessarily delayed the request for rescission,
The requesting party has already asked for money damages. A contract rescission
cannot be obtained after requesting a monetary award.
10. Effect of rescission
The effect of rescission is restoration of the plaintiff to his original position as the
contract had not been made ever. In sec 35 the procedure for rescission of contract has
been described for written contracts it applies on both vendor and vendee. Any one of
such parties can go the court in order to avail the remedy of rescission of the contract.
11. Conclusion
To conclude i can say that the remedy of rescission of the contract is available for all of
those who are entering into a contract between them. There are a lot of reasons which
gives arise to the rescission of the contract and one of the parties can contact to the
court in order to cancel the contract and such order of court brings the parties to back
on the position where they were before entering into the contract.
