O.C.G.A. § 13-4-62 (2019)

Annotations

JUDICIAL DECISIONS Basis for right to restoration upon rescission. - The equitable right to restoration upon the rescission of a contract rests upon the doctrine that a party who has received from another anything of value by virtue of a contract cannot rescind the contract without restoring whatever thing of value one has so gotten. Jones v. Gaskins, 248 Ga. 510, 284 S.E.2d 398 (1981). Letter referring to rescission, but plainly indicating that the subject of rescission was under negotiation, was not a rescission of the contract. Southern Prestige Homes, Inc.

v. Moscoso, 243 Ga. App. 412, 532 S.E.2d 122 (2000). Rescission and restitution are available remedies for material nonperformance or breach in certain situations, but various rules govern situations in which these remedies will be granted. Cutcliffe v. Chesnut, 122 Ga. App. 195, 176 S.E.2d 607 (1970). Rescission not mandatory even if parties can be restored to original positions. - Even if parties can be restored to their respective conditions at time of alleged breach, plaintiff is not required to rescind. Western Con-

tracting Corp. v. State Hwy. Dep’t, 125 Ga. App. 376, 187 S.E.2d 690 (1972). Generally, one injured by breach may rescind or continue under contract and recover damages for breach. Western Contracting Corp. v. State Hwy. Dep’t, 125 Ga. App. 376, 187 S.E.2d 690 (1972). Option for damages or rescission. - When money is paid on contract which is executory on part of one who receives money, and party so receiving fails to fulfill one’s part of the contract, the injured party may elect either to bring action on contract and recover damages for nonperformance, or to consider contract as rescinded and recover money paid. Marietta Publishing Co. v. Times Publishing Co., 26 Ga. App. 752, 107 S.E. 270 (1921); Cutcliffe v. Chesnut, 122 Ga. App. 195, 176 S.E.2d 607 (1970). Rescission abrogates contract, not partially but completely; it leaves rights of parties and amount of damages, if any, to be determined, not by rescinded contract, but by court of equity. Eller v. McMillan, 174 Ga. 729, 163 S.E. 910 (1932). Breach which defeats object of contract may authorize rescission. - Breach of contract as to matter so substantial and fundamental as to defeat object of contract may authorize rescission by opposite party. Martin v. Rollins, Inc., 138 Ga. App. 649, 226 S.E.2d 771 (1976), aff ’d, 238 Ga. 119, 231 S.E.2d 751 (1977); Mayor of Douglasville v. Hilderbrand, 175 Ga. App. 434, 333 S.E.2d 674 (1985). Breach must be material. - County’s refusal to pay all of the requested amount of a contractor’s change order did not constitute a material breach of contract allowing the contractor to terminate the contract, given that the amount of the change order was about two percent of the total contract price. Forsyth County v. Waterscape Servs., LLC, No. A09A1964, 2010 Ga. App. LEXIS 250 (Mar. 16, 2010). Party who has substantially broken contract cannot rescind on ground of other’s nonperformance. - Right to rescind or terminate contract on ground of failure of performance by opposite party belongs only to party who is free from substantial default personally, and a party who has substantially broken contract cannot rescind the contract on ground that other party subsequently refused or failed to perform. Martin v.

Rollins, Inc., 138 Ga. App. 649, 226 S.E.2d 771 (1976), aff ’d, 238 Ga. 119, 231 S.E.2d 751 (1977). Rescission may be had for inceptive fraud, as well as for subsequent breach of contract. Head v. Walker, 243 Ga. 108, 252 S.E.2d 440 (1979). When equitable action for rescission appropriate. Head v. Walker, 243 Ga. 108, 252 S.E.2d 440 (1979). Doctrine of rescission is based upon restitution, and it is only applicable generally where restitution can or ought to be made. This doctrine can have no application to case if one party has acquired nothing which other party is entitled to have restored. Henderson Whse. Co. v. Brand, 105 Ga. 217, 31 S.E. 551 (1898). When contract is rescinded, parties are not to be left where rescission finds the paraties; original status must be restored, or equivalent therefor must be provided in contract or furnished by law. Eller v. McMillan, 174 Ga. 729, 163 S.E. 910 (1932). Party electing to rescind must restore or tender benefits received under contract. Milam v. Gray, 80 Ga. App. 356, 56 S.E.2d 168 (1949). Restoration to substantially original position is sufficient. - Restoration does not require that the opposite party shall be placed in the exact situation in which the party was before the exchange, but only that the party be placed substantially in the party’s original position, and that the party rescinding shall derive no unconscionable advantage from the rescission. Jones v. Gaskins, 248 Ga. 510, 284 S.E.2d 398 (1981); International Software Solutions, Inc. v. Atlanta Pressure Treated Lumber Co., 194 Ga. App. 441, 390 S.E.2d 659 (1990). Recovery of consideration is available remedy. - The restitutionary remedy of recovery of the consideration advanced on the theory of rescission of the contract because of the material nonperformance or breach is an available remedy in this state. Jones v. Gaskins, 248 Ga. 510, 284 S.E.2d 398 (1981). Return of down payment required when contract for sale of land is rescinded. - Defense judgment was reversed as the seller of a vacant lot continued to hold possession and title to the land and offered the land for sale to another after the buyer defaulted on

a contract similar to a bond for title or an installment sale contract; as the seller rescinded the contract, the original status had to be restored and the buyer was entitled to the return of the down payment. Crowell v. Williams, 273 Ga. App. 676, 615 S.E.2d 797 (2005). Defendant may assert right to restoration to original position defensively only. - When vendor is entitled to rescind without consent of opposite party, vendee cannot take advantage of vendee’s own wrong so as to give oneself standing as plaintiff in action to recover for improvements or purchase-money paid in part performance of contract of sale. Such claim can only be asserted defensively, when vendor by exercising right of rescission has clothed vendee with correlative right to be restored to vendee’s status. Clark v. Powell, 30 Ga. App. 198, 117 S.E. 250 (1923). Equitable right to restitution upon rescission not dependent upon full performance of party seeking restitution. - Equitable right to restitution upon rescission of contract does not depend upon full performance of contract by party seeking restitution. This right rests upon doctrine that party who has received from another anything of value by virtue of contract cannot rescind the contract without restoring whatever thing of value one has so gotten. Kerlin v. Young, 159 Ga. 95, 125 S.E. 204 (1924). One seeking rescission for other’s default must show own compliance. - Party seeking rescission due to other’s default must show that party has done all that party is required to do in order to be entitled to performance by other party. Moreover, party seeking to rescind must show that the party was free from default in relation to obligation which the party claims the other party failed to perform. Martin v. Rollins, Inc., 138 Ga. App. 649, 226 S.E.2d 771 (1976), aff ’d, 238 Ga. 119, 231 S.E.2d 751 (1977). Rescission allowed for breach of warranty in conditional sale. - When notes were given for certain apparatus for manufacture under conditional sale, if, upon trial of apparatus by vendee, it did not come up to representations and covenants of vendor, as to their quality and condition, and proved worthless, vendee had right to rescind contract without consent of vendor, vendee being able to restore vendor to condition in

which vendor was before contract was made. Tufts v. Cheatham, 75 Ga. 865 (1885). Rescission of contract for sale of land for breach by return of installment paid. - Vendor may rescind contract for sale of land upon installments, when vendee failed to pay second installment when due by offer to return first installment. Dukes v. Baugh, 91 Ga. 33, 16 S.E. 219 (1892). Rescission of contract to sell realty allowed for breach of parol covenant. - Vendee may rescind contract of sale of realty after vendor failed to improve premises, although this covenant was parol. Epps v. Waring, 93 Ga. 765, 20 S.E. 645 (1894). Rescission is improper remedy where commodity sold has been consumed. - When in contract for sale of corn, a portion was delivered, paid for, and used by purchaser, rescission upon ground that corn was of inferior quality is not proper remedy. Henderson Elevator Co. v. North Ga. Milling Co., 126 Ga. 279, 55 S.E. 50 (1906). Section inapplicable to breach of contract to teach. - Rule of this statute has no application to case when one agrees to each another a certain thing, and, after beginning the course of instruction, refuses to proceed further, whereupon the other party treats the contract as rescinded and brings suit to recover amount which one has paid under agreement. Timmerman v. Stanley, 123 Ga. 850, 51 S.E. 760, 1 L.R.A. (n.s.) 379 (1905) (see O.C.G.A. § 13-4-62). Ordinary rule of rescission does not apply to accord and satisfaction because in order for there to be accord and satisfaction, the accord must be executed. As long as accord is executory, although it is partially performed, original cause of action is not extinguished, and action may be brought upon it. Brunswick & W. Ry. v. Clem, 80 Ga. 534, 7 S.E. 84 (1888). Evidence insufficient to justify recission. - See City of McCaysville v. Cardinal Robotics, LLC, 263 Ga. App. 847, 589 S.E.2d 614 (2003). Cited in White v. Hand, 76 Ga. 3 (1885); McCardle v. Kennedy, 92 Ga. 198, 17 S.E. 1001, 44 Am. St. R. 85 (1893); Collier v. Weyman & Connors, 114 Ga. 944, 41 S.E. 50 (1902); Williams v. Walden, 124 Ga. 913, 53 S.E. 564 (1906); Booth v. Atlanta Clearing-House Ass’n, 132 Ga. 100, 63 S.E. 907 (1909); Georgia Supply Co. v. Coffee, 8

Ga. App. 502, 69 S.E. 1083 (1911); Bishop v. Brantley, 23 Ga. App. 663, 99 S.E. 224 (1919); Fletcher v. Fletcher, 158 Ga. 899, 124 S.E. 722 (1924); Home Ins. Co. v. Swann, 34 Ga. App. 19, 128 S.E. 70 (1924); Riverside Academy v. Urigh, 33 Ga. App. 455, 126 S.E. 900 (1925); Swint v. Adams, 42 Ga. App. 705, 157 S.E. 249 (1931); Smith v. McWhorter, 173 Ga. 255, 160 S.E. 250 (1931); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); C.V. Hill & Co. v. Weinberg, 67 Ga. App. 44, 19 S.E.2d 430 (1942); Carroll v. Witter, 75 Ga. App. 632, 44 S.E.2d 165

(1947); Rumph v. Rister, 92 Ga. App. 29, 87 S.E.2d 447 (1955); Hubert v. Luden’s, Inc., 92 Ga. App. 427, 88 S.E.2d 481 (1955); Tipton v. Harden, 128 Ga. App. 517, 197 S.E.2d 746 (1973); Sachs v. Swartz, 233 Ga. 99, 209 S.E.2d 642 (1974); Dozier v. Matthews, 136 Ga. App. 375, 221 S.E.2d 236 (1975); Uptegraft v. Scott, 169 Ga. App. 12, 311 S.E.2d 187 (1983); English Restaurant, Inc. v. A.R. II., Inc., 194 Ga. App. 639, 391 S.E.2d 462 (1990); Williams v. Dienes Apparatus, Inc., 200 Ga. App. 205, 407 S.E.2d 408 (1991).

RESEARCH REFERENCES Am. Jur. 2d. - 17 Am. Jur. 2d, Contracts, §§ 458, 482, 490 et seq., 517, 518. C.J.S. - 17A C.J.S., Contracts, §§ 389, 418, 432, 444 et seq. ALR. - Presence of noxious weeds as ground for rescission of contract for purchase of land, 2 ALR 1511. Time for rescission by purchaser of chattel for fraud or breach of warranty, 72 ALR 726. Action involving rescission or right to rescind contract and to recover amount paid thereunder as one at law or in equity, 95 ALR 1000. Action based on rescission of contract as one arising on contract, express or implied, within the meaning of attachment statute, 95 ALR 1028. Stamp or transfer tax as payable in respect of tender or return of securities or documents incident to rescission of contract, 100 ALR 1420. Pecuniary damage as essential to rescission of contract for purchase of real or personal property, 106 ALR 125. Owner’s right to rescind building and construction contract for default of contractor, 107 ALR 1035. Remedy of rescission for grantee’s breach of agreement to support grantor, 112 ALR 670. Breach of obligation to pay tax or assessment on land sold as ground for rescission of contract, 139 ALR 971. Partial rescission of contract, 148 ALR 417. Assignability of right to rescind or of right to return of money or other property as incident of rescission, 162 ALR 743. Compensation as alternative relief upon

denial of rescission to purchaser of land, 175 ALR 686. Notice of rescission as irrevocable election when other party refuses to assent thereto, 1 ALR2d 1084. Rescission of corporate stock sale or transaction as authorizing court to award recovery of requisite number of shares to party entitled to relief, 14 ALR2d 855. Commitment of grantor to institution for insane as ground for setting aside conveyance in consideration of support, 18 ALR2d 906. Measure of infant’s recovery for value of chattel traded for another upon his rescission of the transaction, 52 ALR2d 1114. Timeliness of tender or offer of return of consideration for release or compromise, required as a condition of setting it aside, 53 ALR2d 757. What constitutes abandonment of land contract by vendee, 68 ALR2d 581. Venue of action for rescission or cancellation of contract relating to interests in land, 77 ALR2d 1014. Right of lessor to cancel oil or gas lease for breach of implied obligation to explore and develop further after initial discovery of oil or gas, in absence of showing reasonable expectation of profit to lessee from further drilling, 79 ALR2d 792. Effect of attempt to terminate employment or agency contract upon shorter notice than that stipulated in contract, 96 ALR2d 272. Enforceability of contract to make will in return for services, by one who continues performance after death of person originally undertaking to serve, 84 ALR3d 930.

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