Rectification Rescission

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Rectification & Rescission
Equity and trust (Multimedia University)
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Rectification
-s.30 SRA
Crane v Hegeman - the agreement does not have to be concluded, the
Harris Co important aspect is a common continuing intention in
regard to a particular provision or aspect of the agreement.
-Snell’s Equity: What is rectified is not a mistake in the transaction itself, but a
mistake in the way in which that transaction has been expressed in writing.
-s.31: To rectify a written contract, court must be satisfied that all the parties
intended to make an equitable and conscientious agreement.
-s.32: Court may inquire
 what the instrument was intended to mean,
 what were intended to be its legal consequences, and
 is not confined to the enquiry what the language of the instrument was
intended to be.
Oh Hiam v Tham Kong -illustrated the application of the law in the context of land
transactions.
-When Oh Hiam sold the land to Tham Kong, he didn’t
intend to include the land in Setapak.
-There was a mistake as to the intention.
-Oh Hiam then sought for a rectification.
-Held that despite the Land Code provides indefeasibility,
rectification should be made. There were enough proofs to
show that neither party knew of nor had the intention to
include the Setapak land.
When instruments may be rectified:

 Fraud or mutual mistake
 Does not truly express their intention
 Clearly proved
 Without prejudice to rights acquired by third persons in good faith and for value
Fraud/mutual mistake
Frederick E Rose (London) Ltd v mutual mistake is the most obvious reason
Williams H Pim Jnr & Co Ltd; for an order of rectification. The court is
Maxwell v Low Boon Tit; concerned with what the parties had
Tay Tho Bok v Segar Oil Palm Estate actually agreed and not what they would
Sdn Bhd; have agreed had they not been acting
Syarikat Lean Hup (Liew Brothers) Sdn under the mistake.
Bhd v Cheow Chong Tai
Oh Hiam v Tham Brothers; for land related contracts, sufficient
Yuson Bien v Bankers Trust Co Ltd evidence must be adduced to indicate the
intention of the contracting parties.
Lim Hong Shin v Leong Fong Yew the mistake must be common to all parties
and the evidence must be very clear with
regards to the real intentions of the parties.
Riverlate Properties Ltd v Paul; where mistake is unilateral due to fraud,
rectification is an appropriate remedy.

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Otherwise, where the defendant is not

aware of the mistake, rectification is not
allowed.
Thomas Bates & Sons Ltd v It must be shown
Wyndham’s (Lingerie) Ltd 1. A erroneously believed that the
document sought to be rectified contained
a particular term, or did not contain a
particular term,
2. The other party B was aware of the
omission or the inclusion and that it was
due to a mistake on the part of A
3. B has omitted to draw the mistake to the
notice of A
4. Mistake must be one calculated to
benefit B.
Does not truly express their intention

Zakaria Daud v Siti Hussin the instrument must fail to record the true intention
of the parties.
Yuson Bien v Bankers Trust burden of proving intention is on the party asking for
Co Ltd rectification.
Must be clearly proved

Crane v Hegeman-Harris Co the burden on the party asking for rectification is a
heavy one. The working assumption is that the
instrument does indeed represent the intentions of
the parties. The burden of proof on the plaintiff is
beyond reasonable doubt.
Joscelyne v Nissen Court referred to “convincing proof”.
Zakaria Daud v Siti Hussin Must meet a very high standard of proof. The
transaction entered into between the parties and
the documents executed between them voluntarily
and for good and valuable consideration are not to
be set aside willy-nilly for the slightest reason.
-test of irrefragability
Without prejudice to third persons in good faith and for value

Lyme Valley Squash Club Ltd Court will not order rectification as to prejudice a
v Newcastle under Lyme bona fide purchaser for value without notice.
Borough Council
Specific performance of a rectified contract

-s.33: a contract in writing may be first rectified and then, if the plaintiff has so
prayed in his plaint and the court thinks fit, specifically enforced.
Rescission
-in its strict sense, is a right of a party to set aside a contract and be put in a position
as he or she was previously; it is “the right of a party to the contract to the contract

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set aside and restored to his former position, which is known as restitutio in
integrum.”
-s.34: when rescission may be adjudged
(a) voidable/terminable contract
(b) Unlawful contract, defendant is more to blame than plaintiff
(c) Decree for SP of a contract of sale/lease has been made, purchaser/lessee
defaulted payment
-s.35: not allow rescission for mere mistake, unless the party against whom it is
adjudged can be restored to substantially the same position as if the contract had
not been made.
-s.36: if contract cannot be specifically enforced, it may be rescinded/cancelled.
-s.37: court may require the party to whom the relief is granted to make any
compensation to the other which justice may require.
Limits to rescission
1. When rescission is generally not available where this is not possible. However,
court may order rescission on terms which require a pecuniary payment that places
the parties, as nearly as money is able, in the position they would have occupied had
the transaction be fully rescinded.
2. Affirmation. A party that has affirmed a contract may not be allowed to rescind it.
Long v Lloyds Claimant purchased a lorry from the defendant after test drove.
He still purchased the lorry even when he found that there were
certain defects of the lorry. On the first journey, the claimant
contacted the D on certain faults with the lorry and D offered to
pay half the repairs. After driving it for a few times, the lorry
broke down completely and claimant wished to rescind the
contract.
Held: by accepting the offer of payment for half the repairs when
he became aware of the defects, the defendant had lost his right
to rescind as he had affirmed the contract.
3. Rights acquired by a bona fide purchaser for value.

Coldunell Ltd v Where the rights to the property has been acquired by a bona
Gallon fide purchaser for value, rescission should not be available.
4. Delay. Rescission may be refused in cases of unjustified delay in bringing

proceedings.
Leaf v -The claimant purchased a painting from the defendant. Both
International parties believed that the painting was by the artist Constable. In
Galleries fact 5 years later the claimant discovered the painting was not a
Constable. The claimant brought an action based both on
misrepresentation and mistake.
-However, claimant lost the right to rescind the contract through
lapse of time.

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lOMoARcPSD|4330718

Rectification & Rescission

Equity and trust (Multimedia University)

StuDocu is not sponsored or endorsed by any college or university

When instruments may be rectified:

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Otherwise, where the defendant is not

Does not truly express their intention

Must be clearly proved

Without prejudice to third persons in good faith and for value

Specific performance of a rectified contract

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3. Rights acquired by a bona fide purchaser for value.

4. Delay. Rescission may be refused in cases of unjustified delay in bringing

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