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Article Excerpt
The Law of Rescission by Dominic O'Sullivan, Steven Elliott and Rafal Zakrzewski (New York: Oxford University Press, 2008) pages v-lxxiii, 3-699. Price 125.00 [pounds sterling] (hardcover). ISBN 978 19 925011 0.
The Law of Rescission (1) is a tremendous achievement. For the first time, a book sets out specifically, systematically, comprehensively, and as clearly as possible, the law relating to the rescission of contracts, deeds and gifts in England and Wales. For judges, practitioners and scholars in that jurisdiction, it will be an indispensable reference. In other Commonwealth jurisdictions such as Australia, the book is also likely to be of great use: first because, as Dominic O'Sullivan, Steven Elliott and Rafal Zakrzewski point out in their preface, the law of rescission is substantially the same across the Commonwealth; (2) and, secondly, because even where there are jurisdictional differences, the authors identify these differences and, with the occasional (understandable) exception, (3) explain them. To write such a book, especially where none existed before, must have been a daunting undertaking and the authors are to be congratulated on the splendid result.
The book is laid out in seven parts. Part I (Chapters 1 to 3) aims to locate rescission as a discrete object of study, both conceptually and historically. Part II (Chapters 4 to 9) explores the grounds on which a person may either rescind or seek rescission. Part III (Chapters 10 to 12) discusses the mechanics of rescission, always insisting on the important distinction between rescission by election and rescission by order of the court, and emphasising the extinction of the contract that rescission brings about. In Part IV (Chapters 13 to 19), the authors turn to the consequences that flow--guided by the objective of restitutio in integrum--from the extinction of a contract following rescission. Part V (Chapters 20 to 22) considers the position of third parties where rescission has occurred, and Part VI (Chapters 23 to 28) looks at the bars to rescission that exist in the general law and in statute. Finally, Part VII (Chapter 29) focuses on the rescission of gifts and deeds, drawing distinctions where necessary with the rescission of contracts.
When reading this book, one has a strong impression of the rigour and thoroughness with which the authors have dealt with their subject matter. Apparent inconsistencies and irrationalities in the law are always addressed, even if the conclusion is that they really are inconsistencies and irrationalities. Loose ends are always tied up. An excellent example of this may be found in Chapter 2, 'Rescission and Independent Claims'. Drawing analytical distinctions between the relief that follows rescission and relief in the form of compensation or disgorgement, the authors turn to the well-known decision of the Court of Appeal of England and Wales in O'Sullivan v Management Agency & Music Ltd ('O'Sullivan'). (4) The authors argue convincingly that the Court, in that case, failed to observe the distinction between rescission and disgorgement; their Lordships seemed to say that they were ordering an account of profits in order to bring about restitutio in integrum. (5) However, the authors are not content simply to point out the Court's category error. They proceed to note that the result in O'Sullivan actually brought about restitutio in integrum because the account of profits was accompanied by an equitable allowance in favour of the defendants, the effect of which resembled counter-restitution. (6) They then observe that the outcome of O'Sullivan would have been justified even if the disgorgement remedy had gone beyond what was necessary to bring about restitutio in integrum because the disgorgement remedy was justified for reasons--drawn from fiduciary law--that had nothing to do with the logic of rescission. (7)
Another example of the authors' rigour is their analysis in Chapter 29 ('Gifts and Deeds') of the decision of the High Court of Australia in Garcia v National Australia Bank Ltd ('Garcia'). (8) This was the case in which the 'wives' equity' of Yerkey v Jones (9) was retained in preference to the doctrine based on constructive notice that was developed by the House of Lords in Barclays Bank plc v O'Brien. (10) Although they do not say so explicitly, the authors may be taken to approve broadly of the policy objectives of the law in cases where a contract of guarantee, entered into by a wife in order to secure the debts of her husband, is rescinded because of duress, undue influence or misrepresentation on the part of the husband. These policy objectives are met in a case, such as Garcia, where the 'wives' equity' is available.
However, the authors are not satisfied with stating, on policy grounds, that Garcia was decided correctly; they identify a flaw in the reasoning of the majority of the Court which they expose and criticise. The majority stated that one of the facts that must be shown in order to obtain the 'wives' equity' is that the wife was a volunteer, meaning that she must have obtained no financial benefit from the guarantee that she was...
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