ABSTRACT

In equity, there is a wider jurisdiction in respect of mistakes made in the process of contracting, coupled with a more mellow array of remedies. Although the rule at common law and in equity is that the mistake must be fundamental before the court will intervene, what appears to be fundamental in equity seems to differ from the very narrow range of mistakes recognised at common law. An important feature of the equitable remedies for mistake is that the court may rescind the contract but at the same time may impose terms upon the order for rescission, thereby recognising the restitutionary and counter-restitutionary claims of both parties. For example, in Cooper v Phibbs,17 a mistake as to the ownership of certain fishery rights rendered a contract for the sale of those rights invalid. The court ordered rescission, but because the party in occupation had improved the fishery during his period of occupation, the order was tempered by a requirement that those improvements should be paid for by allowing a lien to be exercised over the fishery by way of security.

It has been seen already that a misrepresentation can cause a person to enter into a contract he would not otherwise have made. Apart from the remedy of damages considered elsewhere,18 the standard remedy for misrepresentation is that of rescission of the contract, at the instance of the party misled, so as to restore the parties to the positions they occupied before the misrepresentation was made. This restoration differs according to the subject matter of the contract. Where the benefit conferred by the representee is in monetary form, the claimant’s restitution measure is the value received. The claimant need not identify the money held by the defendant in order to obtain restitution. Where the subject matter of the contract is not money, the effect of rescission is to ignore the contract and leave a right in rem in favour of the property transferred.