Clough v London and North Western Railway Co: 1871

When considering an application for rescission the court must ask whether the representee has elected to affirm the contract, elected to rescind the contract or made no election. Mellor J said: ‘In such cases the question is, has the person on whom the fraud was practised, having notice of the fraud, elected not to avoid the contract? Or has he elected to avoid it? Or has he made no election?
We think that so long as he has made no election he retains the right to determine it either way, subject to this, that if in the interval whilst he is deliberating, an innocent third party has acquired an interest in the property or if in consequence of his delay the position even of the wrongdoer is affected, it will preclude him from exercising his right to rescind.
And lapse of time without rescinding will furnish evidence that he has determined to affirm the contract, and when the lapse of time is great, it probably would in practice be treated as conclusive evidence to shew that he has so determined. But we cannot see any principle, and are not aware of any authority for saying that the mere fact that one who is a party to the fraud has issued a writ and commenced an action before the rescission is such a change of position as would preclude the defrauded party from exercising his election to rescind.’

Judges:

Mellor J

Citations:

[1871] LR 7 Exch 26

Jurisdiction:

England and Wales

Cited by:

CitedFiona Trust and Holding Corp and others v Privalov and others ComC 20-Oct-2006
The parties disputed whether their claim should be arbitrated.
Held: A claim as to whether the contract itself had been made was not one which could be arbitrated by provisions in that contract. It does not arise ‘under’ the contract. The . .
Lists of cited by and citing cases may be incomplete.

Contract, Equity

Updated: 01 May 2022; Ref: scu.245564