Rescission in the context of conveyancing is often referred as a remedy in the case of contracts where there has been a problem due to misrepresentation, fraud, mistake, etc. The following explains about rescission in detail, including the contractual right of the aggrieved party to rescind, limitation periods, remedies in the case of misrepresentation, etc.
Through rescission, the parties to the contract can be allowed to go back to their pre-contract position. This is done by undoing the contract and paying of compensation to the aggrieved party. But damages are not to be construed in the conventional sense of the word because there will have been no breach of contract. Rescission being an equitable remedy, its operation is subject to general equitable bars.
Contractual right to rescind
Sometimes, the right to rescind is given by the contract where circumstances in which these rights shall operate, the party’s rights and duties in the event of a rescission, and other elements are specified. Such a clause is included where the contract is conditional; i.e. it becomes operational on the fulfillment of a certain condition. Under both the Standard Conditions of Sale, the right to rescind is available in the following conditions:
- For misrepresentation (SC 7.1, SCPC 9.1)
- Where a licence to assign is not imminent in leasehold transactions (SC 8.3, SCPC10.3)
- Where either the buyer or the seller has failed to comply with a notice to complete (SC7.4 and SC 7.5, SCPC 9.5 and 9.6)
When parties to the contract exercise one of the above conditions, the rights to rescind are governed by SC 7.4 or SCPC 9.2, as the case maybe. These provisions explain about the repayment of deposit with accrued interest, the returning of all documents to seller, and cancellation of any registration that has taken place (at expenses of buyer).
Limitation period
When rescission is provided for contractual obligations it must be exercised within the time limit specified, or if no time limit is provided then within a reasonable time. Usually claims for contractual right to rescind should be made within six years (as provided in the Limitation Act 1980). But if the contract was made by a deed, a 12 year limitation period is applicable. All claims for rescission arising out of the general law principles are subject to the doctrine of lapse of time.
Photo courtesy: MAClarke21
