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The right in equity to rescind is the right of a party to set aside a transaction and to be restored to their former position. It is a remedy for misrepresentation or for common/mutual mistake.
Rescission for breach is available where one party accepts the other's repudiatory breach. A repudiatory breach is where a party fails or refuses to perform an essential or fundamental term of the contract and is taken to have decided to set the contract aside. The party who is not in breach can elect to continue the contract, claiming damages for the breach, or to accept the repudiatory breach and to treat the contract as at an end. Both parties are discharged from further performance of the contract. A secondary obligation on the defaulting party is substituted to pay monetary compensation to the non-defaulting part for the losses sustained by reason of the breach.
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Drafting and negotiating an endeavours obligation—checklist This Checklist sets out the key issues to be considered when drafting and negotiating an ‘endeavours’ obligation and considers various ways in which an endeavours clause can be restricted in scope. For guidance on ‘endeavours’ obligations, see Practice Note: Reasonable and best endeavours. This Checklist does not address enforceability of ‘endeavours’ obligations and related drafting considerations. For guidance, see Practice Note: Reasonable and best endeavours—Drafting endeavours clauses. An endeavours obligation should only be used where a party’s lack of control or changing circumstances mean that an absolute obligation is not appropriate. If parties insist on including a best endeavours, reasonable endeavours or similar obligation in documentation, they should be aware of the difficulties of interpretation and the consequent uncertainty as to the extent of the liabilities involved. Given the particular uncertainty surrounding an ‘all reasonable endeavours’ obligation, the drafter should consider using either ‘best endeavours’ or ‘reasonable endeavours’. More certainty can be obtained by: • considering the extent of the obligation imposed • setting...
Drafting and negotiating an entire agreement clause—checklist This Checklist sets out key issues to consider, and provides practical guidance, when drafting and negotiating entire agreement clauses in a business-to-business (B2B) contract. It considers the implications of common law and statutory controls, including the Unfair Contract Terms Act 1977 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967). The purpose of an entire agreement clause is to give the parties certainty that the entirety of the agreement between them is set out in writing and to ensure that any pre-contractual representations, statements, arrangements or discussions will not form part of the agreement they are entering into. Statements are often made by one party to another as part of the pre-contract negotiations (for example as part of a sales process). Disputes can arise around whether, or which, statements are intended to form part of the contract or potentially give rise to other remedies. Depending on the facts, a pre-contractual statement might take legal effect (and give rise to remedies). For more information, see Practice Note: Pre-contractual representations and statements....
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This Practice Note considers the remedy of rescission, summarising when and how a contract may be rescinded (at common law, equity and under statute) and thereby brought to an end. It includes the effect of rescission, the main grounds for rescinding a contract (misrepresentation, mistake, undue influence, duress, non-disclosure, fiduciary misdealing and bribery) and the main bars to seeking rescission as a remedy of affirmation, intervention of third party rights and impossibility of restitution.For guidance on rescission in the context of a misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy.There are numerous ways in which a contract can come to an end, see: Terminating contracts—how and when a contract ends—overview for an outline, together with links to the underlying practical guidance, including Practice Note: Termination and expiry of contracts.For a summary, in tabular format, of the key and illustrative judgments handed down since 1 January 2020, considering contract law issues, see Practice Notes:•Contract disputes—key and illustrative decisions (2024–2025)•Contract disputes—key and illustrative decisions (2020–2023)What is rescission of a contract?The remedy of...
This Practice Note concerns repudiation and sets out what a repudiatory breach of contract means. It explains how a repudiatory breach goes to the core of the contract and the options or remedies available to an innocent party as a result of the other party’s repudiation, which include either accepting the repudiatory breach and treating the contract as ended, or affirming the contract. This Practice Note explains the meaning of an anticipatory breach of contract and considers when that may also be a repudiatory breach. Termination for repudiatory breach is a common law right and a complex area of law, well documented with cases. If a party is seeking to terminate a contract for another party’s repudiatory breach the advice is to proceed with caution. It is not a risk-free strategy for termination, and each case should be evaluated on its own facts.Where a party purports to terminate a contract for the repudiatory breach of another party and the circumstances turn out not to amount to a repudiation, the act...
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Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of selling corporate entity] incorporated in [England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Seller); 2 [Insert name of purchasing corporate entity] incorporated in England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Buyer), and 3 [Insert name of guarantor entity] incorporated in England and Wales OR [insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Guarantor) [(each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in [England and...
Share purchase agreement—pro-buyer—individual sellers—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 The several persons whose names and addresses are set out in Schedule 1 (together the Sellers), and 2 [Insert name of purchasing corporate entity] incorporated in [England and Wales OR [Insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Buyer), [(each of the Sellers and the Buyer being a Party and together the Sellers and the Buyer are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in[ England and Wales OR [insert country of incorporation]]. Details of the Company are set out in Schedule 2, Part A. (B) The Sellers are the legal and beneficial owners of the Sale Shares (as defined below), being in aggregate the entire allotted and issued share capital of the Company. (C) The Sellers have agreed to sell and the...
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Which limitation period applies if two causes of action are being brought together which have different limitations? Assuming that each cause of action has a distinct statutory limitation period, it would be possible for one cause of action to be time-barred, and therefore fail (or be struck out), whilst other causes of action might survive and ultimately be successful upon disposal of the claim. For example, in Brent London Borough Council v Davies, a complex series of different causes of action were brought against a number of defendants. The Court considered different limitation periods both with respect to the different causes of action and, within the different causes of action, to different elements of loss. However, the position is complicated where the causes of action include equitable claims which do not have an express statutory limitation period. For example, the tort of deceit has a six-year limitation period under section 2 of the Limitation Act 1980 (LA 1980). A claim in equity to rescind a contract for fraudulent misrepresentation,...
A tenant entered into a 12-month AST and the landlord has served a valid section 21 notice terminating the tenancy on the expiry of the term. The tenant entered into the tenancy having been assured by the landlord that they could stay for longer than one year. Does the client have any cause of action or remedy based on estoppel or misrepresentation? Misrepresentation Misrepresentation is a statement of a fact which is untrue. In order to establish a misrepresentation you must be able to point to the represented words either on the page or electronically, or point to them being said by a certain person, on a certain date. There must be an actual representation or statement. The representation must be a fact, as distinct from a statement of opinion, a statement of intention or a commendatory statement. The representation must be false. The general rule is that, in determining whether there has been an express representation, and to what effect, the court has to consider what a...
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Property Disputes analysis: This is the first High Court case to hold that defective works by a developer gave rise to a ‘relevant liability’ as a result of a ‘building safety risk’ under section 130(3)(b) of the Building Safety Act 2022 (BSA 2022), paving the way for the claimant right to manage company (RTM Co) to apply at a subsequent hearing for a building liability order (BLO) against the parent company of the insolvent developer. The Technology and Construction Court (TCC) gave guidance on the procedure for seeking a BLO. Further, the RTM Co was, under an agreement to purchase the property, able to recover against the developer and by extension against the parent company as guarantor, all of the individual leaseholders’ losses for breach of covenant in their leases. Written by Tiffany Scott, barrister, Wilberforce Chambers.
This week's edition of Financial Services weekly highlights includes: PRA sends Dear CEO letters to UK deposit takers and international banks; EBA issues Opinion on interaction between output floor and Pillar 2 requirements; UNEP FI and WWF publish report mapping rise in nature-related banking regulations globally; plus dates for your diary over the coming week.
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