Equitable Remedy of Recession

17.10.22 9:54 AM

October 17, 2022

The claimant is interested in finding out the

remedy available to him in the event the
misrepresenter had made a representation.
The best remedy misrepresentee could obtain
from court is the remedy of recission. This
equitable remedy is available to the
misrepresentee only if the parties can be
restored back to their positions as at the time
the contract is entered.
*The equitable remedy is lost if the claimant
falls under any one of the following
category:
1.Restoration is impossible
In the landmark case of Lagunas Nitrate v
Lagunas Syndicate, the buyer was made to
believe that X amount of nitrate can be
extracted from the ground purchased. After
substantial amount of nitrate was extracted
by the buyer, he identified that the quantity
of nitrate told by the seller cannot be
extracted. Held: The buyer is unable to return
back the nitrate ground and receive full
money paid as he is unable to return back the
land in the exact same manner as sold to him
by the seller.

2.Delay defeats equity

Leaf v International galleries is authority to
state that the affected misrepresentee should
have come to courts within a reasonable
time.
In the above case, the buyer of the painting
was made to believe that the painting was
done by a reputed artist but in-fact it was
identified to be false only after 5 years of the
sale.
HELD: five years taken to identify the
false statement is too long

3. If the goods had gone into the hands of

a third party
since this is an equitable remedy If a third
party had got hold of the goods through
equity, the courts will not compel the third
party to return back the goods, to claimant to
representee

In philips v. Group, a rogue has entered the

jewelry shop and hide his identity and had
taken the jewelry in return for a check. Later
on, the jewelries were given to an innocent
pawn broker.
Held: the third party being the pawn
broker had no knowledge about the
previous misrepresentation and therefore
he is not bound to return back the
jewelries to the jewelry shop.

4. Affirming a misrepresentation
Car and universal finance v colvel
states that if the misrepresentee had got
to know about the misrepresentation he
should have stopped in using the
product but if he continues to use the
product irrespective of the
misrepresentation done later on he
cannot rely on misrepresentation

Mistakes

Common mistake, mutual mistake,

unilateral mistake

Mistake can be classified into common

mistake
• Both parties to the contract are
mistaken on the same thing.

Mutual mistake
• Both parties to the contract are
mistaken on two different but identical
subject matters.

Unilateral mistake
• Only one party to the contract is
mistaken.

1) Common mistake

1. Common mistake as to the existence

on subject matter
In this category, both parties to the
contract are mistaken on the existence
of the subject matter but unknown to
the parties the subject matter had never
existed or sees to exist. (res extincta)

E.g., both the seller and the buyer

believe that the harvest is kept in the
store but unknown to them due to
severe floods, the entire harvest is
washes away.

In couturier v hastie the seller and the

buyer were expecting the consignment
of corn to be loaded at the harbor but
unknown to them since the corn had
started to ferment the master of the
ship had sold the entire consignment
elsewhere. Held: it’s a common
mistake.

Common mistake as to the existence of

particular state of affairs fundamental
to the contract.
In this category the subject matter is
available but the parties are mistaken
as to a particular feature of the subject
matter.

E.g.,
through an online order the buyer had
placed, an order to purchase a dark red
headphones set, the supplier had
provided a light red headphones sett
(The parties are mistaken as to the
color) if the mistake is a fundamental
one which means the color is so
important the contract will be void but
if the mistake is not that fundamental
the contract will continue and it will be
a mistake as to Quality.

galloway v galloway, the couple

believed that they were married but
once disputes has arisen they wanted to
go for a divorce
Held: since the parties were only
cohabiting and they were not married
there is no need for them to go for a
divorce.

• cooper v phibbs is authority is states

that theres no need for a person to buy
his own property or become a tenant in
his own property.

2) Mutual mistake

Mutual mistake as to the existence of

the subject matter.
In this category both parties to the
contract are mistaken as to the
existence of the subject matter because
there are two subject matter available
which are identical.

In raffels v wichelhous the seller and

the buyer were expecting the goods to
be transported through a ship called x
pearless but unknown to them on that
day two ships by the same name were
anchored at the Bombay harbor
Held: It’s a mutual mistake

3) Unilateral mistake

1. Unilateral mistake as to the terms of

the offer.
In this category only one party to the contract
will be mistaken and that is regarding a term.

I) Mistake by the offeror:

In hartog v collin and shields, both

parties to the contract were merchants
and it is a known fact that animal skins
are sold by pieces and not by weight.
During the conversation mistakenly the
seller told the buyer that he will sell
animal skins by weight.
Held: It was a unilateral mistake
from the offeror’s end as he had
intended to sell animals skins for
piece and not by weight which was
known by the buyer.

II) Mistake by the offeree:

In smith v hughs the buyer thought that

he was purchasing old oats but infact
he had purchased new one’s.
Held: Since the buyer was mistaken
as to the nature of the oats which not
known by the seller it’s a unilateral
mistake.

2. Unilateral mistake of identity of the

person

In this category one party of the

contract is mistaken as to the identity
of the other.

shogun finance v hudson, had laid

down the following requirements.
1. Identity is material to the contract
(Non face to face contract)
2. The claimant is mistaken as to the
others identity
3. The other party is aware about the
mistake

In the above case, the defendant had

stolen the driving license of an other
and had applied to the finance
company to obtain financial benefits.
The company had thought that the
owner of the driving license is making
the request. The person committing the
fraud was aware that the finance
company will be mistaken
Held: Since the transaction took
place by post where the two parties
had not met one an other the first
requirement is satisfied and the
other two requirement also satisfy,
therefor the contract is void for
mistake.

This is the same thing that took place

in Philips v groups, the representative
of the jewelry shop thought that the
customer of the jewels was a reputed
person based on his words. However
since the first requirement satisfied the
contract is void for mistake.

Discharge of a contract

1) By agreement
Both parties to the contract have
completed the contractual terms and
condition, the contract will be
discharged (Set aside)

2) By breach
Here when either party to the contract
had breached there terms of the
contract the other party could terminate
the contract.

3) By performance:
When both parties to the contract have
performed their duties to the letter the
contract is terminated.

4) By frustration:
frustration is a supervening event
which is beyond the control of the
parties, that makes the contract
impossible or radically different from
what the.parties expect it to be

Governmental activities health

condition
Destruction of subject matter are the
frustration

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