contract-law england-and-wales
What does it mean to grant rescission on terms?
<p>Kindly see the embolded phrase below.</p>
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<h3>18.5 Remedy</h3>
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<p>There is no tort of undue influence. As a result, C cannot recover damages from D if a claim
in undue influence is successful. This is sometimes criticised, and it may be that in time
undue influence will evolve to be recognised as a wrong which triggers compensation.<sup>45</sup>
After all, in <em>Libya Investment Authority v Goldman Sachs International</em>, Rose J recognised
that the stronger party owes certain duties to the weaker party in a relationship of influence.
A breach of duty is a wrong, and the normal response to a civil wrong is damages.<br />
      Nevertheless, the traditional and orthodox view is that the only remedy for undue influence
is rescission.<sup>46</sup> It is worth highlighting that the usual bars of rescission apply.<sup>47</sup> So, for
example, in <em>Allcard v Skinner</em>, the claim for undue influence was barred because of the claimant’s
delay in bringing her claim (laches). Similarly, in the three-party scenarios discussed
in Chapter 18.4, if the bank is not put on inquiry and purchases its rights in good faith
without notice of the undue influence, C will not be able to rescind the transaction since that
would unfairly prejudice the bank. But if the bank is put on inquiry, then it will have notice
of the undue influence, and as a result the rights it acquires will not be sufficient to prevent rescission unless that bank has taken reasonable steps to ensure that C has not entered into
the transaction as a result of undue influence. In <em>Etridge</em>, Lord Scott said:<sup>48</sup></p>
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<p>If contractual consent has been procured by undue influence or misrepresentation for which a
party to the contract is responsible, the other party, the victim, is entitled, subject to the usual
defences of change of position, affirmation, delay etc, to avoid the contract.</p>
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<p>There have been cases where <strong>rescission has been shown to be a flexible remedy that has been
granted on terms.</strong><sup>49</sup> For example, in <em>Cheese v Thomas</em>,<sup>50</sup> the agreement was between C, aged
85, and his great-nephew, D, to buy a house to live in together. They purchased a house for
£83,000; C contributed £43,000 in cash, and D contributed the rest of the money by way of
a mortgage. D defaulted on the mortgage payments, and the house was sold for £55,000.
The court held that the relationship between C and D was one of trust and confidence, and
that the transaction was manifestly disadvantageous to C, since he paid a substantial sum of
money for a ‘seriously insecure’ right that tied him to that particular house.</p>
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<p>45 See eg L Ho, ‘Undue Influence and Equitable Compensation’ in P Birks and F Rose (eds), <em>Restitution and
Equity</em> (Mansfield Press, 2000) vol 1. Similar arguments are often made in the context of duress, which is also not, in itself, a wrong that leads to damages.<br />
46 For general discussion of rescission, see Chapter 16.4.
47 See Chapter 16.4.4.<br />
48 <em>Etridge</em>, [144]. 49 Though partial rescission is impossible: see Chapter 16.4.4.1.
50 [1994] 1 WLR 129.</p>
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<p><em>JC Smith's The Law of Contract</em> 2021 3 ed, pp 285-6.</p>

<p><strong>What does it mean to grant rescission on terms?</strong></p>
<p>When setting aside a contract, the court may may apply what it called &quot;practical justice” in <a href="https://www.bailii.org/ew/cases/EWCA/Civ/2015/745.html" rel="nofollow noreferrer"><em>Salt v Stratsone 2015</em></a> which can include ordering rescission on terms that allow for compensation for any unfairness that would otherwise result.</p>
