(v) Partial Rescission and Rescission on Terms
A contract can only be rescinded in its entirety and not partially,[1] and it is also not possible to rescind a transaction on terms, such as by setting aside the whole transaction and substituting a new one for it.[2] This is illustrated by TSB Bank plc v Camfield,1 where it was held that a mortgage would be set aside completely as a result of a husband’s misrepresentation and it would not be treated as valid to the extent of the maximum liability which the wife had actually accepted.
The apparent reason for the courts’ refusal to allow partial rescission or rescission on terms stems from the perceived nature of rescission itself. Rescission is not considered to be a form of relief to which terms can be attached, but is a form of self-help. The claimant rescinds the transaction and the only role for the courts is to determine whether he or she has rescinded the transaction or is entitled to do so.191 There is consequently no scope for any halfway house; either the claimant is or is not entitled to rescind the transaction in question. But, as has been seen, this is only true of rescission at Law, whereas rescission in Equity does indeed depend on the intervention of the court. In fact, rescission on terms has been recognized in Equity, such as where a claimant wishes to rescind a transaction for undue influence.192 There will also be circumstances where it is appropriate to exercise judicial discretion in Equity to impose terms as a condition of rescission. So, for example, if the claimant entered into a transaction as a result of misrepresentation, thinking that he or she had entered into a surety transaction for ?5,000 but in fact the transaction was for ?50,000, the surety transaction should be rescinded but terms be imposed that a ?5,000 surety transaction should be substituted, since this is the amount which the claimant had actually consented to guarantee.
It has been recognized that it is possible to rescind a self-contained and severable part of a non-contractual voluntary transaction, such as a disposition to a trust made by a deed which is voidable for mistake.[3] This has been justified on the unconvincing ground that in such a transaction there is no need to restore both parties to their original position, since, being a voluntary disposition, only the recipient will have received a benefit.
