Communicating Rescission, and the Promisee's Neglect

A limit worth stating. Once rescission has taken effect, the election is made and cannot be undone, and third party rights acquired for value without notice before rescission are protected. Section 66 governs the mechanics of communicating the election, not the ability to change one's mind after it has bitten.

Section 67: the promisee who obstructs

The rule

"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."

Its illustration:

"A contracts with B to repair B's house.

B neglects or refuses to point out to A the places in which his house requires repair.

A is excused for the non-performance of the contract if it is caused by such neglect or refusal."

Broken down

Four elements, and the fourth is the limit.

1. A promisee. The obstruction must come from the party entitled to the performance.
2. Neglects or refuses. Passive neglect is enough; there need be no deliberate refusal.
3. To afford the promisor REASONABLE facilities for the performance. What is reasonable depends on the contract. In the illustration it is pointing out which parts of the house need repair. It may be access to a site, delivery of materials the promisee undertook to supply, information only the promisee has, or approvals he was to obtain.
4. The promisor is excused as to any non performance CAUSED THEREBY. The excuse is limited to what the obstruction caused. It is not a general discharge, and a promisor who could have performed the rest and did not is still liable for that.

Section 67 compared with section 53

These two are set together and the difference is worth a table.

The organising idea: section 53 gives the obstructed party a way out of the contract with compensation; section 67 gives him a shield against being held liable for a failure the promisee caused.

A worked example

Yash contracts with Zoya to repair the roof of her building for four lakh rupees, Zoya to give him access and to identify the leaking sections.

• Zoya never identifies the sections and Yash cannot begin. Section 67 and its illustration almost exactly. Yash is excused for the non performance caused by her neglect, and he is not in breach.
• Zoya identifies the sections but locks the building for two months. She has neglected to afford reasonable facilities, and Yash is excused as to the delay caused. If she went further and physically turned him away after he had started, section 53 may also be engaged, since the promises are reciprocal, making the contract voidable at his option with compensation.
• Zoya fails to identify one of five sections, and Yash does nothing at all for three months. He is excused only as to the non performance caused by her neglect, which is the one section. He remains liable for the four he could have repaired.
• Yash decides to rescind for her prevention under section 53 and writes a letter. Under section 66 the rescission is communicated by the rules that apply to a proposal, so it is complete against him when he posts it and against Zoya when it reaches her.
• He posts the letter on Monday and emails a withdrawal on Tuesday, which she reads before the letter arrives. Applying section 5 through section 66, the rescission was revoked before its communication was complete against her, so the contract stands.

What it does NOT mean

"A party rescinds by making up his mind." Rescission must be communicated, by the rules in sections 3 and 4 imported by section 66.

"A rescission can never be withdrawn." It may be revoked before its communication is complete as against the other party, following section 5. Once it has taken effect the election is final.

"Section 67 discharges the contract." It excuses the promisor only as to the non performance caused by the neglect or refusal. The rest of the contract stands.

"Section 67 gives the promisor damages." It does not. It is a defence. Where the promisee's conduct amounts to prevention under section 53, or to a breach, compensation is available on those provisions.

"Section 53 and section 67 are the same." Section 53 needs reciprocal promises and active prevention, and gives a voidable contract plus compensation. Section 67 needs only a neglect to afford reasonable facilities, and gives an excuse.

Quick revision

• s.66: rescission of a voidable contract is communicated or revoked in the same manner, and subject to the same rules, as a proposal. So ss.3, 4 and 5 apply.
• Complete against the party rescinding when put in course of transmission; against the other party when it comes to his knowledge. A rescission may be revoked before it is complete against the other party.
• Rescission must be communicated; a private decision is not a rescission.
• s.67: where a promisee neglects or refuses to afford the promisor reasonable facilities for performance, the promisor is excused as to any non performance caused thereby.
• Illustration: B does not point out the places in the house needing repair, and A is excused.
• The excuse is limited to what the obstruction caused; it is not a general discharge.
• s.53 (prevention, reciprocal promises, voidable plus compensation) against s.67 (neglect of facilities, an excuse).

Test yourself

1. How is rescission of a voidable contract communicated? Section 66 provides that it 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. So sections 3, 4 and 5 govern: any act or omission intended to communicate will do; communication is complete against the party rescinding when it is put in course of transmission and against the other party when it comes to his knowledge; and it may be revoked before it is complete against that other party.

2. Can a rescission be withdrawn? Yes, before its communication is complete as against the other party, applying the revocation rule for proposals through section 66. Once the rescission has taken effect the election is made and cannot be recalled, and third party rights acquired for value without notice before rescission are protected.

3. State section 67 with its illustration. 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. The illustration has A contracting to repair B's house and B neglecting or refusing to point out the places needing repair, so that A is excused for the non performance caused by that neglect.

4. Is the excuse under section 67 a complete discharge? No. The promisor is excused only as to the non performance caused by the neglect or refusal. Where he could have performed other parts of the contract despite the obstruction and did not, he remains liable for those, so the section is a limited defence rather than a discharge.

5. Distinguish section 53 from section 67. Section 53 applies to a contract containing reciprocal promises where one party actively prevents the other from performing, and it makes the contract voidable at the option of the party prevented and entitles him to compensation for his loss. Section 67 applies to any contract where the promisee merely neglects or refuses to afford reasonable facilities, and it gives the promisor a defence excusing the non performance caused, without any right to compensation under that section.