(ii) The Process of Rescission

The method by which the claimant rescinds a transaction depends on whether rescission occurs at Law or in Equity.^[1]

(1) Rescission at Law

Where the claimant wishes to rescind a transaction at Law he or she can do so without obtaining a court order.^[2] Consequently, rescission at Law is a self-help mechanism.^[3] Where the claimant wishes to rescind a transaction it is usually necessary that he or she communicates this wish to the defendant, either through words or conduct.^[4] But in certain exceptional circumstances such direct communication is not required. For example, in Car and Universal Finance Co Ltd v Caldwell^[5] the claimant wanted to rescind a contract to sell a car, but he could not trace the purchaser of the vehicle. It was held to be sufficient to rescind the contract that he had notified both the Automobile Association and the police that he wished them to assist him in finding the car. Alternatively, if there is a dispute about the right to rescind, and the claimant commences judicial proceedings to resolve the matter, the statement in the particulars of claim that the transaction has been or should be set aside will in itself be sufficient to rescind the transaction.^[6]

(2) Rescission in Equity

Rescission in Equity is a form of equitable relief which is determined and effected by the court in the exercise of judicial discretion.^[7] Although a claimant must still elect for the contract to be rescinded, this is simply a decision made by the claimant as to whether an application should be made to the court. Once the order of the court has been obtained, rescission will operate retrospectively to the date when the claimant commenced proceed- ings.^[8] The judge has a discretion both as to whether to order rescission and, if so, as to the nature and extent of that relief which may, for example, be subject to conditions.^[9]

• [1] See J O’Sullivan, ‘Rescission as a Self-help Remedy: A Critical Analysis’ (2000) 59 CLJ 509.
• [2] Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525, 532 (Lord Denning MR); Brotherton vAseguradora Cobeguros (No 2) [2003] EWCA Civ 705, [2003] 3 All ER (Comm) 298, [27] (Mance LJ).
• [3] Halpern v Halpern (No 2) [2006] EWHC 1728 (Comm), [2007] QB 88, [26] (Nigel Teare QC).
• [4] Clough v London and North Western Railway Co (1871) LR 7 Ex 26, 34 (Mellor J).
• [5] [1965] 1 QB 525.
• [6] TSB Bank plc v Camfield [1995] 1 WLR 430, 438 (Roch LJ).
• [7] Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218, 1278 (Lord Blackburn); Spence vCrawford [1939] 3 All ER 271, 288 (Lord Wright).
• [8] Reese Silver Mining Co v Smith (1869) LR 4 HL 64.
• [9] Cheese v Thomas [1994] 1 WLR 129, 137 (Sir Donald Nicholls V-C); Wilson v Hurstanger Ltd [2007]EWCA Civ 299, [2001] 1 WLR 2351, [48] (Tuckey LJ).