Specific Relief Act (SRA)
Rescission of Contracts: Sections 27 to 30
Rescission is the remedy that undoes a contract and puts the parties back, as far as possible, where they stood before it. It is the opposite of specific performance: instead of compelling the bargain, it cancels it. Four sections govern it. Section 27 says when rescission may be adjudged and when it is refused; Section 28 gives a special power to rescind after a decree of specific performance where the buyer fails to pay; Section 29 lets a plaintiff pray for rescission in the alternative to performance; and Section 30 requires the party rescinding to do equity. This note works through all four.
Figure: Rescission under Sections 27 to 30: when it is adjudged and refused, rescission after a decree, the alternative prayer, and doing equity
1. When Rescission May Be Adjudged: Section 27
Granted, and refused ▪ Granted. Rescission may be adjudged where the contract is voidable or terminable by the plaintiff, or where the contract is unlawful for a cause not apparent on its face and the defendant is more to blame than the plaintiff. ▪ Refused: ratification. Where the plaintiff has expressly or impliedly ratified the contract. ▪ Refused: no restoration. Where, because of a change of circumstances since the contract, the parties cannot be restored to their former positions. ▪ Refused: third-party rights. Where third parties have, during the subsistence of the contract, acquired rights in good faith and for value. ▪ Partial rescission. Where only a part of the contract is sought to be rescinded, and that part is not severable from the rest, rescission of that part alone is not granted. |
2. Rescission After a Decree of Specific Performance: Section 28
A power exercised in the same suit ▪ The situation. In a decree for the specific performance of a contract for the sale or lease of immovable property, the purchaser or lessee does not pay the purchase money or other sum within the period the decree allows. ▪ The vendor's remedy. The vendor or lessor may apply in the same suit for an order rescinding the contract, wholly or in part. ▪ The court's options. The court may extend the time for payment; or, if it rescinds, it may order the purchaser to deliver up possession, and direct the repayment of any deposit, with or without interest, or its forfeiture, as is just. ▪ No separate suit needed. The relief is obtained by application in the specific-performance suit itself; the decree is, in this sense, preliminary in nature until the payment is made. |
- If the purchaser pays within the extended time, the court orders execution of the conveyance and delivery of possession, and, where appropriate, partition and separate possession.
3. Rescission as an Alternative Prayer: Section 29
Pleading rescission in the alternative ▪ The rule. A plaintiff suing for specific performance may pray, in the alternative, that if the contract cannot be specifically enforced, it may be rescinded and delivered up to be cancelled. ▪ The effect. The court, if it refuses specific performance, may grant rescission, so the plaintiff is not turned away empty-handed from the same suit and forced to sue again. |
4. The Court May Require the Party to Do Equity: Section 30
Restoration and compensation ▪ The principle. On adjudging the rescission of a contract, the court may require the party to whom relief is granted to restore, so far as may be, any benefit he has received from the other party, and to make any compensation to him which justice may require. ▪ Why. He who seeks to undo a bargain must first do equity; the court will not let a party rescind and keep what he gained under the very contract he wants set aside. |
5. Rescission Distinguished
Concept | How it differs from rescission |
|---|---|
Termination | Termination ends a contract for the future under its own terms or for breach; rescission unwinds it from the beginning and restores the parties |
Cancellation, ss. 31 to 33 | Cancellation annuls a written instrument; rescission undoes the contract itself |
Rectification, s. 26 | Rectification corrects the writing so the contract survives; rescission destroys the contract |
Specific performance | Specific performance compels the bargain; rescission cancels it. Section 29 lets the plaintiff ask for one or, failing it, the other |
6. Frequently Asked Questions
Q. When may a court adjudge rescission of a contract?
A. Under Section 27, where the contract is voidable or terminable by the plaintiff, or is unlawful for a cause not apparent on its face and the defendant is more to blame than the plaintiff.
Q. When will rescission be refused?
A. Where the plaintiff has ratified the contract, where the parties cannot be restored to their original positions, or where third parties have acquired rights in good faith and for value.
Q. What happens if a purchaser does not pay after a decree of specific performance?
A. Under Section 28, the vendor may apply in the same suit to rescind the contract; the court may instead extend time, and on rescission may order possession restored and deposits refunded or forfeited as is just.
Q. Must a party who rescinds give anything back?
A. Yes. Under Section 30, the court may require the party to whom rescission is granted to restore benefits received and to make such compensation as justice requires.
SEO METADATA URL slug: rescission-of-contracts-sections-27-to-30-specific-relief-act SEO title: Rescission of Contracts: Sections 27 to 30 of the Specific Relief Act Meta description: Sections 27 to 30 of the Specific Relief Act 1963: when rescission is adjudged and refused, rescission after a decree of specific performance, the alternative prayer for rescission, and the duty to restore benefits and do equity. Keywords: rescission of contract Specific Relief Act, Section 27 rescission, Section 28 rescission after decree, Section 29 alternative prayer, Section 30 restore benefits |