Wednesday, October 31, 2012

Equitable Remedies

There are quite a few contractual remedies to remember when taking the MBE. Two that are sometimes confused are restitution and recission. Keep the distinctions in mind as you prepare for the exam.

Restitution is a remedy under which the parties are returned to their position before the contract was formed. Be sure to distinguish this from damages which aims to place the parties in the position they would have been in had the contract been performed (sometimes called the "benefit of the bargain.") Restitution is measured by the value rendered to the defendant, and it is an equitable remedy, rather than a legal remedy such as contractual damages.

Rescission is a remedy that discharges the contractual duties of each party, and puts an end to the transaction. The contract is treated as if it had never been entered into. Unilateral rescission results when only one of the parties wants to rescind, but that party will need to have adequate legal grounds. In determining whether adequate grounds exist, look towards contractual defenses such as mutual mistake. If there is mutual mistake (among other defenses), that will provide either party with the right to unilaterally rescind the contract.

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