Under misrepresentation remedies, when is rescission still available after completion?

Under misrepresentation remedies, when is rescission still available after completion?

• A. Always, regardless of delay or third-party interests
• B. Never after completion
• C. Only if the misrepresentation was fraudulent
• D. It remains available after completion, unless there is excessive delay or a third party has acquired an interest such as a lender

Answer: (D)

Rescission aims to unwind the contract and restore the parties to their pre-contract positions, so it can operate even after completion because misrepresentation vitiates consent at the time of contracting. However, two practical limits apply once the contract has been completed. First, if there has been excessive delay in seeking rescission, the court will refuse to grant it to avoid injustice and because restoration may no longer be feasible. Second, if a third party has acquired an interest in the subject matter—such as a lender with a charge or someone who has completed and taken a later legal or equitable interest—rescission will be barred or severely restricted to protect that third party’s rights. Therefore rescission remains available after completion unless there is excessive delay or a third-party interest has been acquired.

Rescission aims to unwind the contract and restore the parties to their pre-contract positions, so it can operate even after completion because misrepresentation vitiates consent at the time of contracting. However, two practical limits apply once the contract has been completed. First, if there has been excessive delay in seeking rescission, the court will refuse to grant it to avoid injustice and because restoration may no longer be feasible. Second, if a third party has acquired an interest in the subject matter—such as a lender with a charge or someone who has completed and taken a later legal or equitable interest—rescission will be barred or severely restricted to protect that third party’s rights. Therefore rescission remains available after completion unless there is excessive delay or a third-party interest has been acquired.