Gale Encyclopedia Of American Law 3Rd Edition Volume 8 P37 pot

RES IPSA LOQUITUR [Latin, The thing speaks for itself.] A rebuttable presumption or inference that the defendant was negligent, which arises upon proof that the instrumentality or condit

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REPUDIATION The rejection or refusal of a duty, relation, right,

or privilege

Repudiation of a contract means a refusal to perform the duty or obligation owed to the other party

ANTICIPATORY REPUDIATIONis an act or decla-ration before performance is due under a contract that indicates that the party will not perform his or her obligation on the future date specified in the contract

REPUGNANCY

An inconsistency or opposition between two or more clauses of the same deed, contract, or statute, between two or more material allegations of the samePLEADINGor between any two writings

Inconsistent defenses or claims are permit-ted under the Federal Rules of Civil Procedure

CROSS REFERENCE Civil Procedure.

REQUIREMENTS CONTRACT

A written agreement whereby a buyer assents to purchase for a sufficient consideration (the inducement to enter into an agreement) all the merchandise of a designated type that he or she might require for use in his or her own established business

The UNIFORM COMMERCIAL CODE (UCC), a body of law adopted by the states that governs commercial transactions, provides that the parties must act in GOOD FAITH where quantity

is to be measured by the requirements of the purchaser or, in the case of output contracts, the output of the seller No quantity that is unreasonably disproportionate to any stated estimate or to any normal or otherwise comparable previous output or requirements can be tendered or demanded

Although the UCC does not explicitly make output and requirements agreements enforce-able as contracts, the implication of validity is clear The theoretical difficulty with these agreements has been that they border on being illusory An agreement by a buyer to purchase from the seller all the particular goods that he or she requires can be interpreted to leave the buyer with a choice as to whether he or she wishes to require any goods at all Similarly an agreement by which a seller assents to sell all of

his or her output to a buyer can be interpreted

as leaving the seller free to control his or her output If read in such manner, these agree-ments appear to leave one of the parties free to perform or not to perform as he or she sees fit Valid commercial reasons exist, however, for these contracts, and the courts have discovered means of upholding both output and require-ments agreerequire-ments if the only objection to their enforceability is that they are too indefinite The UCC does not attempt to dictate contract terms, but it contains two rules of construction that further remove these agreements from the contention that they are too indefinite to enforce and that provide guidance to courts in regard to their enforcement

First, the measure of the quantity entailed must be determined in good faith The buyer in

a requirements agreement or the seller in an output agreement is not free, with an uncon-trolled discretion, to determine the quantity of goods that can be demanded or tendered under the agreement An illustration of a type of agreement in which one of the parties has an uncontrolled discretion would be one in which the buyer can order as much of a specified quantity of goods“as he or she wants.” Such an agreement, unless there are unusual circum-stances that require a different construction of these words, leaves the buyer free to buy or not

to buy at his or her discretion It does not entail mutual duties and constitutes no more than an offer, a proposal by the seller that would become a contract with each order from the buyer, but that could be revoked by the seller at any time prior to acceptance The buyer is not free to order or not to order at his or her discretion, if an agreement calls for the seller to sell and the buyer to buy all or a stated portion

of the buyer’s requirements When the buyer has requirements, he or she must purchase them from the seller and exercise good faith in ascertaining them The nonmerchant must act with honesty in fact; the merchant must meet this same test but must also conduct business in accordance with commercial standards of fair dealing in the trade, so that his or her requirements approximate a reasonably foresee-able figure A seller under an output agreement must meet the same test

Second, the UCC furnishes a center around which the quantity is to be determined The buyer cannot demand and, therefore, the seller

is not obligated to deliver, and the seller cannot

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tender and, therefore, the buyer is not required

to accept any quantity that is unreasonably

disproportionate to any estimate that the parties

have stated or if no estimate was stated, to any

comparable previous requirements or output

If, for example, a seller has agreed to deliver all

of the buyer’s requirements of a certain

product, and if the buyer has been ordering

approximately 500 units each month, the seller

would not be obligated to deliver 1,500 units in

one month, even though the buyer could prove

that 1,500 units were required for his or her

business The determination of which prior

period is “comparable” depends upon the

nature of the business involved The UCC does

not require that the chosen comparable period

be one in which the parties were dealing with

each other If this is the first output or

requirements contract between the parties and

no estimate is stated, the UCC permits any

normal or comparable period involving the

seller’s output or the buyer’s requirements to be

employed in measuring the obligations under

such an agreement

Even though output and requirements

contracts are sufficiently defined for

enforce-ment, difficult problems of determining the

obligations under these agreements arise

when-ever there is an unexpected shift in the demand

for, or the price of, the goods involved In these

instances, a merchant might search for methods

of altering production schedules or modifying

output (if a seller) or requirements (if a buyer)

Attempts to increase or decrease

require-ments often result in disputes between the

parties that require judicial intervention In

order to resolve these situations, the

“unreason-ably disproportionate” test of the UCC supplies

a tool that, when combined with the

require-ment of good faith, permits the courts to resolve

these disputes The UCC also provides that a

lawful agreement that results in an exclusive

dealing in goods imposes, unless otherwise

agreed, an obligation by the seller to make his

or her best effort to supply the goods and an

obligation by the buyer to make his or her best

effort to promote their sale This requirement is

a specific application of the general doctrine of

good faith

The legality of output, requirements, or

other exclusive dealing contracts depends upon

the application of federal or state antitrust acts,

laws that protect commerce and trade from

unlawful restraints, price discriminations, and price fixing The UCC provides that only

“lawful” agreements may be enforced

REQUISITION

A written demand; a formal request or require-ment The formal demand by one government upon another, or by the governor of one state upon the governor of another state, of the surrender of a fugitive from justice The taking or seizure of property by government

Requisition refers to the seizure ofPERSONAL PROPERTY, whereas condemnation entails the taking of real property

RES [Latin, A thing.] An object, a subject matter, or a status against which legal proceedings have been instituted

For example, in a suit involving a captured ship, the seized vessel is the res, and proceedings

of this nature are said to be in rem Res, however, does not always refer to tangible

PERSONAL PROPERTY In matrimonial actions, for example, the res is the marital status of the parties

RES ADJUDICATA See RES JUDICATA

RES GESTAE [Latin, Things done.] Secondhand statements considered trustworthy for the purpose of admis-sion as evidence in a lawsuit when repeated by a witness because they were made spontaneously and concurrently with an event

Res gestae describes a common-law doctrine governing testimony Under theHEARSAYrule, a court normally refuses to admit as evidence statements that a witness says he or she heard another person say The doctrine of res gestae provided an exception to this rule During the nineteenth century and much of the twentieth century, courts applied the exception by following an assortment of common-law rules

With the introduction of the FEDERAL RULES OF EVIDENCE, federal courts abolished res gestae as a common-law doctrine and replaced it with explicit exceptions to the ban on hearsay To varying degrees, state RULES OF EVIDENCE are modeled on the federal rules Although the term

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is now infrequently used, the legacy of res gestae

is an integral part of the modern framework of hearsay evidence

Traditionally, two reasons have made hear-say inadmissible: unfairness and possible inac-curacy Allowing a witness to repeat hearsay does not provide the accused with an opportu-nity to question the speaker of the original statement, and the witness may have misunder-stood or misinterpreted the statement Thus, in

a trial, counsel can object to a witness’s testimony as hearsay But in the nineteenth century, the borrowing of the concept of res gestae fromENGLISH LAWoffered an exception to this rule Res gestae is based on the belief that because certain statements are made naturally, spontaneously, and without deliberation during the course of an event, they carry a high degree

of credibility and leave little room for misun-derstanding or misinterpretation The doctrine held that such statements are more trustworthy than other secondhand statements and there-fore should be admissible as evidence

As the common-law rule developed, it acquired a number of tests for determining admissibility To be admissible, the statements must relate, explain, or characterize an event or transaction They must be natural statements growing out of the event, as opposed to a narrative of a past, completed affair Addition-ally, the statements must be spontaneous, evoked by the event itself, and not the result

of premeditation Finally, the original speaker must have participated in the transaction or witnessed the event in question Thus, for example, a witness might testify that during a bank ROBBERY, she or he heard another person shout,“That person is robbing the bank!” and the statement could be admitted as an exception

to the ban on hearsay

In practice, cases involving res gestae were usually decided by applying some variation of these tests In the 1959 case of Carroll v Guffey,

20 Ill App 2d 470, 156 N.E.2d 267, an Illinois appellate court heard the appeal of a defendant who was held liable for injuries sustained by another motorist in a car crash The trial court had admitted the testimony of the plaintiff concerning unidentified eyewitnesses who alleg-edly saw the accident, over the objection of defense counsel who argued that the statements were hearsay The appellate court ruled that the declarations of the eyewitnesses were not res

gestae exceptions: They were not made concur-rently with the collision, but afterward, and were only a narrative of what the eyewitnesses said had taken place Thus the appellate court reversed the trial court’s decision

The process of refining the concept began in the 1920s, when the influential lawyer and educator Edmund M Morgan attacked its pliability and vagueness: “[T]his troublesome expression owes its existence and persistence in our law of evidence to an inclination of judges and lawyers to avoid the toilsome exertion of exact analysis and precise thinking.” In an attempt at clarification, Morgan developed seven categories for the exception In the 1940s the Model Code of Evidence made further refinements, and by the 1970s the Federal Rules of Evidence had included ele-ments of res gestae in Rule 803 as one of its many exceptions to the hearsay rule

FURTHER READINGS Andrus, Jennifer 2007 “The Excited Utterance: Construct-ing an Essential Link between the Event and the Statement in Anglo-American Hearsay Doctrine ” Texas Linguistics Forum 51 (April).

Moorehead, James Donald 1995 “Compromising the Hearsay Rule: The Fallacy of Res Gestae Reliability ” Loyola of Los Angeles Law Review 29 (November) Morgan, Edmund M 1922 “A Suggested Classification

of Utterances Admissible as Res Gestae ” Yale Law Journal 31.

Prater, Dennis D., and Virginia M Klemme 1996 “Res Gestae Raises Its Ugly Head ” Journal of the Kansas Bar Association 65 (October).

RES IPSA LOQUITUR [Latin, The thing speaks for itself.] A rebuttable presumption or inference that the defendant was negligent, which arises upon proof that the instrumentality or condition causing the injury was in the defendant’s exclusive control and that the accident was one that ordinarily does not occur

in the absence ofNEGLIGENCE Res ipsa loquitur, or res ipsa, as it is commonly called, is really a rule of evidence, not a rule ofSUBSTANTIVE LAW

Negligence is conduct that falls below the standard established by law for the protection of others against an unreasonable risk of harm In order to prevail in a negligence action, a plaintiff must establish by a PREPONDERANCE OF EVIDENCE that the defendant’s conduct was unreasonable in light of the particular situation and that such conduct caused the plaintiff’s

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injury The mere fact that an accident or an

injury has occurred, with nothing more, is not

evidence of negligence There must be evidence

that negligence caused the event Such evidence

can consist of direct testimony by eyewitnesses

who observed the defendant’s unreasonable

conduct and its injurious result

Negligence can also be established by

CIRCUMSTANTIAL EVIDENCE when no direct

dence exists Circumstantial evidence is

evi-dence of one recognized fact or set of facts from

which the fact to be determined can be

reasonably inferred because it is the logical

conclusion that can be drawn from all the

known facts For example, skid marks at the

scene of an accident are circumstantial evidence

that a car was driven at an excessive speed

The reasoning process must be based upon the facts offered as evidence, together with a sufficient background of human experience, to justify the conclusion Evidence that merely suggests the possibility of negligence is insufficient, since negligence must appear more likely than not to have occurred This inference must cover all the necessary elements of negligence: that the defen-dant owed the plaintiff a duty, which the defendant violated by failing to act according to the required standard of conduct, and that such negligent conduct injured the plaintiff

Res ipsa loquitur is one form of circumstan-tial evidence that permits a reasonable person to surmise that the most PROBABLE CAUSE of an accident was the defendant’s negligence This concept was first advanced in 1863 in a case in

[Attorney name]

[Address]

[Telephone number]

Attorney for Plaintiff, [name]

xxx Court, County of xxx

[xxx District]

xxxxxx ) No xxx

Plaintiff(s) )

vs ) CERTIFICATE OF RELIANCE ON

) [RES IPSA LOQUITUR] [AND

xxxxxx ) ON] [FAILURE TO INFORM]

Defendant(s) ) (CCP §411.35(d))

_ )

[Name] declares:

1 I am the attorney for plaintiff, [name], in this action.

2 This action is one for damages arising out of professional negligence.

3 A certificate of merit is not required because plaintiff intends to rely solely on [the doctrine of res ipsa loquitur] [and on]

[defendant [name]'s failure to inform plaintiff of the consequences of a procedure].

I certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Date: xxxxxx

[Typed name]

Attorney for xxxxxx

[This certificate must be filed when the complaint is filed, in contrast to the certificate of merit, which must be filed on or before the service

of the complaint.]

Certificate of Reliance on Res Ipsa Loquitur

A sample certificate of reliance on res ipsa loquitur.

ILLUSTRATION BY GGS CREATIVE RESOURCES REPRODUCED BY PERMISSION OF GALE,

A PART OF CENGAGE LEARNING.

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which a barrel of flour rolled out of a warehouse window and fell upon a passing pedestrian Res ipsa loquitur was the reasonable conclusion because, under the circumstances, the defen-dant was probably culpable since no other explanation was likely The concept was rapidly applied to cases involving injuries to passengers caused by carriers, such as railroads, which were required to prove they had not been negligent

Res ipsa loquitur, as it is in the early 2000s applied by nearly all of the 50 states, deals with the sufficiency of circumstantial evidence and,

as in some states, affects theBURDEN OF PROOFin negligence cases

Elements Three basic requirements must be satisfied before a court can submit the question of negligence to the jury under res ipsa loquitur

Inference of Negligence The plaintiff’s injury must be of a type that does not ordinarily occur unless someone has been negligent This requirement, which is the inference of negli-gence, allows res ipsa to be applied to a wide variety of situations, such as the falling of elevators, the presence of a dead mouse in a bottle of soda, or a streetcar careening through a restaurant Although many of the cases involve freakish and improbable situations, ordinary events, such as where a passenger is injured when a vehicle stops abruptly, will also warrant the application of res ipsa Commercial air travel became so safe in the late twentieth century that planes engaged in regularly scheduled commer-cial flights generally do not crash unless someone has been negligent Vehicular acci-dents caused by a sudden loss of control, such as

a car suddenly swerving off the road or a truck skidding on a slippery road and crossing into the wrong lane of traffic, justify the conclusion that such an event would not normally occur except for someone’s negligence

This inference of negligence does not mean that all other possible causes of the injurious event must be eliminated A plaintiff using res ipsa to enable her case to go to the jury must prove that the defendant’s negligence is the most probable cause of her injuries The particular nature of the defendant’s negligence need not be pinpointed For instance, where a bottle of soda explodes in a supermarket immediately after its delivery by the bottler, the injured person does not have to prove that

the bottler failed to notice a defect in the bottle

or that the soda was overcarbonated It is sufficient to establish that the explosion would not have occurred unless the bottler had been negligent

Where the inference of negligence depends upon facts beyond the common knowledge of jurors,EXPERT TESTIMONY is necessary to furnish this information Such testimony is usually presented in cases of professional negligence, such asMEDICAL MALPRACTICE An expert witness can testify directly in regard to the inferred fact itself, such as when the expert testifies that the plaintiff’s injury would not have occurred if the doctor had not been negligent

Exclusive Control by the Defendant The plaintiff’s injury or damage must have been caused by an instrumentality or condition that was within the exclusive control of the defen-dant Some courts interpret this requirement to mean that exclusive control or management must have existed at the time of the injury This interpretation has led to harsh results In one case, a customer sat down in a chair in a store while waiting for a salesperson The chair collapsed and the customer was injured The court denied recovery to the customer in her negligence action against the store because it found that the chair was not within the exclusive control of the store but rather was under the exclusive control of the customer at the time of injury

This application of the rule has been regarded as inflexible by many courts, since it severely restricts the type of case to which res ipsa can be applied In response, many states prescribe that the negligence must occur while the defendant has control over the instrumen-tality In the example of the exploding soda bottle, the negligence of the bottler occurred somewhere in the bottling process The fact that the bottle was sitting on a supermarket shelf and was no longer in the immediate possession of the bottler does not prevent the reasonable conclusion that the injury resulted from the negligence of the bottler The injured plaintiff must first show that the bottle was not cracked

by mishandling after it left the plant of the bottler This does not mean, however, that the plaintiff must account for every minute of the existence of the bottle from the time it left the plant If the plaintiff can substantiate the fact of careful handling in general and the

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absence of unusual incidents, such as the

deliberate tampering of the bottled goods by

an unknown person, such facts would permit

reasonable persons to conclude that the injury

was more likely than not to have been caused by

the defendant’s negligence while he had

exclu-sive control of the bottle

Since there must be exclusive control by the

defendant, res ipsa cannot be used against

multiple defendants in a negligence case where

the plaintiff claims he has been injured by the

negligence of another For example, a

pedes-trian is injured when he is struck by a car that

had just collided with another vehicle The

pedestrian institutes a negligence action against

one driver and seeks to have res ipsa applied to

his case An inference of negligence does not

arise from the mere fact of the collision, since

neither driver is in exclusive control of the

situation If, however, one driver is cleared of

fault by some specific evidence, the jury is

justified in inferring that the injury was the

result of the other driver’s negligence

The requirement of exclusive control by the

defendant is not applied in cases involving

VICARIOUS LIABILITY or shared responsibility for

the same instrumentality or condition In one

case, a person was injured when an elevator in

which she was riding fell very rapidly She

brought a negligence action against both the

owner of the building and the company that

manufactured the elevator and had the

mainte-nance service contract for the building The

plaintiff relied completely on res ipsa The jury

found for the plaintiff since a falling elevator is

not the type of accident that usually occurs

without negligence, so that the negligence of

those in control can be inferred The service

contract between the elevator company and the

building owner established the fact that they

exerted joint control over the elevator The

requirement of exclusive control by a defendant

of the instrumentality causing injury does not

mean that only a single entity has control

Where two or more defendants are acting

jointly, the doctrine of res ipsa can be applied

to establish their negligence

Some state courts have departed from the

requirement of exclusive control and applied res

ipsa loquitur against multiple defendants In one

case, while an anesthetized patient was

under-going an operation for appendicitis, he suffered

a traumatic injury to his shoulder Res ipsa was

applied against all of the doctors and hospital employees connected with the operation, al-though not all of them were negligent The court based its decision on the special responsi-bility for the plaintiff’s safety undertaken by everyone concerned

Freedom from Contributory Negligence The event in question must not have been attribut-able to any cause for which the plaintiff is responsible The plaintiff must not have done anything that significantly contributed to the accident that caused the injury In one case, a water skier was injured when the propeller of the boat that had been towing him struck his arm as the boat was attempting to pick him up

He sued the driver and the owner of the boat for negligence, which could be found if res ipsa was applied The plaintiff attempted to dive under-water when he saw the boat approaching him, but he was unsuccessful in escaping injury The defendants claimed that the attempted dive caused the accident and, therefore, res ipsa was inapplicable

The trial court accepted this argument, which was later rejected by the appellate court

The appellate court decided that the question of whether the attempted dive caused the accident should have been presented to the jury under res ipsa It stated that a plaintiff may rely upon res ipsa loquitur even though he has participated in the events leading to the accident if the evidence excludes his conduct as the responsible cause In light of the skier’s testimony that he was about

to be struck by the boat, as well as the testimony

of other eyewitnesses, the jury could logically conclude that the attempted dive was not a cause of the accident

Accessibility of Evidence

In addition to the three basic requirements, a few states apply res ipsa in negligence cases where the evidence of the facts of the event is more accessible to the defendant than to the plaintiff In one state, for example, a plaintiff was injured when the bleacher section in which she was sitting collapsed during a basketball game under the management and supervision of the defendant high school athletic association

She sued the association for negligence under the doctrine of res ipsa The appellate court, reviewing a verdict for the plaintiff, affirmed it because “the underlying reason for the res ipsa

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rule is that the chief evidence of the true cause

of the injury is practically accessible to the defendant but inaccessible to the injured person.”

The Effect of Res Ipsa Res ipsa loquitur is usually used when there is no direct evidence of the defendant’s negligence

The facts presented to the court must meet the three basic requirements Once the court decides that the facts of a particular case warrant the application of res ipsa, it instructs the jury on the basic principles, but it is the function of the jury to decide the credibility and weight of the inference to be drawn from the known facts The jury can conclude that the defendant was negligent, but the jury is not compelled to do so Everything depends upon the particular facts of each case An inference of negligence might be so clear that no reasonable person could fail to accept it If the defendant offers no explanation, the court can direct a verdict for the plaintiff if the inference is so strong that reasonable jurors could not reach any other conclusion Where the jury considers the question of negligence, it can decide that the facts do not logically lead to an inference of the defendant’s negligence, even if the defendant did not offer any evidence in her defense If the defendant presents evidence that makes it unlikely that she has acted negligently, the plaintiff will lose his case unless he can rebut the evidence, since such evidence destroys the inference of negligence created by res ipsa

A minority of courts hold that res ipsa creates a rebuttable presumption of negligence

Unless the defendant offers sufficient evidence

to contradict it, the court must direct a verdict for the plaintiff Some states have gone as far as

to shift the burden of proof to the defendant, requiring her to introduce evidence of greater weight than that of the plaintiff

FURTHER READINGS King, Michael G 1999 “‘Res’ of the Story.” Los Angeles Daily Journal (July 16).

Tanovich, David M 2002 “Res Ipsa Loquitur and Racial Profiling ” Criminal Law Quarterly 46 (October).

Twerski, Aaron D 2009 “Negligence Per Se and Res Ipsa Loquitor: Kissing Cousins ” Wake Forest L Rev 44 (winter).

CROSS REFERENCES Evidence; Malpractice; Negligence; Probable Cause.

RES JUDICATA [Latin, A thing adjudged.] A rule that a final judgment on the merits by a court that has jurisdiction is conclusive between the parties to a suit as to all matters that were litigated or that could have been litigated in that suit

The U.S legal system places a high value on allowing a party to litigate a civil lawsuit for money damages only once U.S courts employ the rule of res judicata to prevent a dissatisfied party from trying to litigate the issue a second time

Res judicata will be applied to a pending lawsuit if several facts can be established by the party asserting the res judicata defense First, the party must show that a final judgment on the merits of the case had been entered by a court that has jurisdiction over the matter This means that a final decision in the first lawsuit was based on the factual and legal disputes between the parties rather than on a procedural defect, such as the failure to serve theDEFENDANT

with legal process

Once a court makes a final decision, it enters a final judgment in the case The judgment recites pertinent data about the case, such as the names of the parties, the fact that a jury verdict was rendered, and the disposition made The judgment is filed with the COURT ADMINISTRATORfor that judicial jurisdiction The party asserting res judicata, having introduced a final judgment on the merits, must then show that the decision in the first lawsuit was conclusive as to the matters in the second suit For example, assume that the

PLAINTIFFin the first lawsuit asserts that she was injured in an auto accident She sues the driver

of the other auto under a theory ofNEGLIGENCE

A jury returns a verdict that finds that the defendant was not negligent The injured driver then files a second lawsuit alleging additional facts that would help her prove that the other driver was negligent A court would dismiss the second lawsuit under res judicata because the second lawsuit is based on the same CAUSE OF ACTION(negligence) and the same injury claim Under the companion rule of COLLATERAL ESTOPPEL, which is also known as“issue preclu-sion,” the plaintiff will not be allowed to file a second lawsuit for money damages using a different cause of action or claim Under collateral ESTOPPEL, the parties are precluded from litigating a second lawsuit using a different

354 RES JUDICATA

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cause of action based on any issue of fact

common to both suits that had been litigated

and determined in the first suit For example,

the plaintiff who lost her auto accident case

based on a theory of negligence cannot proceed

with a second lawsuit based on an ALLEGATION

that the driver intentionally struck her auto,

thus making it an intentional-tort cause of

action A court would assert collateral estoppel

because the plaintiff could have alleged an

intentional tort cause of action in the original

complaint

The application of res judicata and collateral

estoppel produces finality for the parties and

promotes judicial economy Parties know that

when final judgment is entered and all appeals

are exhausted, the case is over, and the decision

will be binding on all issues determined in the

lawsuit

CROSS REFERENCES

Collateral Estoppel; Issue Preclusion.

RESCIND

To declare a contract void—of no legal force or

binding effect—from its inception and thereby

restore the parties to the positions they would have

occupied had no contract ever been made

RESCISSION

The abrogation of a contract, effective from its

inception, thereby restoring the parties to the

positions they would have occupied if no contract

had ever been formed

By Agreement

Mutual rescission, or rescission by agreement, is

a discharge of both parties from the obligations

of a contract by a new agreement made after the

execution of the original contract but prior to

its performance Rescission by mutual assent is

separate from the right of one of the parties to

rescind or cancel the contract for cause, or

pursuant to a provision in the contract

The parties to an executory or incomplete

contract can rescind it at any time by mutual

agreement, even if the contract itself contains a

contrary provision A rescission by mutual

assent can properly include a promise by either

or both parties to make restitution as part of the

contract of rescission

The right to rescind is limited to the parties

to the contract or those legally authorized to act for them As with other contracts, the parties

to the rescission agreement must be mentally competent

Form The rescission agreement can be either written or oral An implied agreement is also effective, provided the assent of the parties can

be shown by their acts and the surrounding circumstances An express rescission of a contract as a whole is adequate and effective, without specifically designating each and every clause to be rescinded Unless a statute provides otherwise, an oral rescission agreement is valid, even though the contract being rescinded contains a provision that it can be altered only

in writing

Assent All the parties to the contract must assent to its rescission because mutual rescis-sion involves the formation of a new contract

A meeting of minds can be reached by an offer

to rescind and an acceptance by the other party

One party to a contract cannot rescind it simply

by giving notice to the other party that he or she intends to do so

Although a breach of contract by one party

is not an offer to rescind, the other party can treat the repudiation as an offer to rescind that

he or she can accept, leading to rescission of the contract by mutual assent Rescission must be clearly expressed, however, and the conduct of the parties must be inconsistent with the existence of the contract The fact that some of the materials that form part of the subject matter

of the contract have been returned is not conclusive as to whether rescission has occurred

Consideration An agreement to rescind a prior contract must be based on a sufficient consideration, an inducement When a contract remains executory on both sides, an agreement

to rescind by one side is sufficient consideration for the agreement to cancel on the other, and vice versa If the contract has been executed on one side, an agreement to rescind that is made without any new consideration is void, that is to say of no legal force or binding effect

Operation and Effect The mutual rights of the parties are controlled by the terms of their rescission agreement The parties are generally restored to their original rights in regard to the subject matter They no longer have any rights

or obligations under the rescinded contract, and

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no claim or action for subsequent breach can be maintained

Whether rights or obligations already ac-crued are abandoned when the contract is rescinded in theCOURSE OF PERFORMANCEdepends

on the intention of the parties, as deduced from all attending facts and circumstances, and on whether the parties have reserved such rights

Recovery can be allowed, however, for partial performance

Wrong or Default of Adverse Party

NoARBITRARYright exists to rescind a contract

An executory contract that is VOIDABLE can be rescinded on the grounds ofFRAUD, mistake, or incapacity

A contract, whether oral or written, can be rescinded on the ground of fraud The right to rescind for fraud is not barred because the defrauded party has failed to perform Gener-ally, false statements of value, or the failure to perform a promise to do something in the future without fraudulent intent, will not provide a basis for rescission for fraud or

MISREPRESENTATION A party proves sufficient grounds for rescission by showing that he or she was induced to part with some legal right or

to assume some legal liability that he or she otherwise would not have done but for the fraudulent representations

On discovering the fraud, the victimized party can affirm the contract and sue for damages He or she might instead repudiate the contract, tender back what he or she has received, and recover what he or she has parted with, or its value; the adoption of one remedy, however, excludes the other

A contract obtained by duress can be rescinded, and in such a case, the same rules apply as in the case of fraud A contract cannot

be avoided because of duress or coercion, however, unless the duress was sufficient to overcome completely the will of the party who

is seeking to avoid the contract

A mutual mistake concerning a material fact entitles the party affected by the mistake to rescind the contract, unless the contract has already been completed and rescission would be

an injustice to the other party Rescission can also be allowed even for a unilateral, or one-sided, mistake in order to prevent an UNJUST ENRICHMENT of the other party On rescission, the aggrieved party can recover the money he or

she has paid or the property he or she has delivered under the contract

A contract made by a person of unsound mind can be rescinded when the parties can be restored to the status quo This rule applies even

if the opposite party was unaware of the mental condition, and the contract was fair, reasonable, and made inGOOD FAITHfor adequate consider-ation When one party knows of the other’s incapacity, the contract can be rescinded on the ground of fraud When both parties are sane and the contract is valid, subsequent insanity of one of the parties is not a ground for rescission, unless it affects the substance or purpose of the contract, as in the case of a personal services contract

As a general rule, a contract cannot be rescinded because one of the parties was intoxi-cated at the time it was made If, however, unfair advantage was taken of a person’s intoxicated condition, or if the intoxication was induced

by the party seeking to take advantage of the contract, the contract can be set aside on the ground of fraud Similarly, habitual drunkenness that impairs a party’s mental abilities can con-stitute a ground for rescission

Inadequate Consideration Mere inadequacy of consideration is not a sufficient reason to justify rescission When the consideration is so inadequate that it shocks the conscience of the court or is so closely connected with suspicious circumstances or misrepresentations as to provide substantial evidence of fraud, it can furnish a basis for relief

Nonperformance or Breach One party to a contract can rescind it because of substantial nonperformance or breach by the other party The party who knowingly and willfully fails to perform cannot complain that the other party to the contract has injured him

or her by terminating the contract The right to rescind does not arise from every breach but is permitted only when the breach is so substantial and fundamental that it defeats the objective of the parties in making the agreement The breach must pertain to the essence of the contract The act must be an unqualified refusal by the other party to perform and should amount to a decision not to be bound by the contract in the future A party to a contract who is in default

356 RESCISSION

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cannot, however, rescind because of a breach by

the other party

When time is of the essence in a contract,

failure to perform within the time stipulated is a

ground for rescission Otherwise a delay in the

time of performance is not considered a material

breach justifying rescission When performance

is intended within a reasonable time, one party

cannot suddenly and without reasonable notice

terminate the contract while the other party is

attempting in good faith to perform it

An unconditional notice by one party that

he does not intend to perform a contract is a

ground for rescission by the other party In

order to justify rescission, the refusal must be

absolute and unconditional

When one party to a contract abandons it

and refuses further performance or her conduct

shows that she is repudiating the contract, the

other party is entitled to rescission A

disagree-ment over the terms of the contract and a

subsequent refusal to perform in a particular

manner by one of the parties do not constitute an

ABANDONMENTof the contract justifying rescission

Time

A right to rescind must be exercised promptly

or within a reasonable time after the discovery

of the facts that authorize the right A

reason-able time is defined by the circumstances of the

particular case The rule that rescission must be

prompt does not operate where an excuse or

justification for a delay is shown

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