Communicating Rescission, and the Promisee's Neglect

In one line

Two closing sections of Module III's range: how a rescission is actually communicated, and what happens when the promisee himself gets in the way of performance.

In the words a student can write in an exam: section 66 of the Indian Contract Act 1872 provides that "The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal." Section 67 provides that "If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby."

Section 66: rescission borrows the rules for a proposal

Why the Act did it this way

Rescission is an act that must reach the other party to have effect. So is a proposal, and so is the revocation of a proposal. Rather than write a second set of rules, the Act simply imports the first set.

That makes section 66 a signpost, and answering on it means going back to Module I. The rules it imports are:

• Section 3, the modes of communication: any act or omission of the party by which he intends to communicate, or which has the effect of communicating.
• Section 4, when communication is complete: as against the person who makes it, when it is put in a course of transmission so as to be out of his power; and as against the person to whom it is made, when it comes to his knowledge.
• Section 5, revocation: a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer.

See [Communication of Proposal, Acceptance and Revocation] and [Revocation of Proposals and Acceptances].

What follows in practice

Rescission must be communicated. A party who privately decides to rescind has not rescinded. He must do some act by which he intends to communicate it, or which has that effect. Filing a suit for rescission communicates it; so does a letter, and so may conduct such as returning the goods.

The two dates differ. As against the party rescinding, the communication is complete when the letter is posted; as against the other party, when it reaches him. That matters where rights change hands in between.

Rescission may be revoked. This is the part students overlook, and it is why section 66 exists rather than a bare rule that rescission must be communicated. Applying section 5 by analogy, a rescission may be withdrawn before its communication is complete as against the other party. So a party who posts a rescission and telegraphs a withdrawal that arrives first has not rescinded.