law-rescission-canellation-of-contract-remedy | repudiation of contract by a party |


Castillo also cites Texas Co. v. State, 281 S.W.2d 83, 91 (Tex. 1955), as support for the argument that
discovery under these circumstances was immaterial, asserting that Ford was not entitled to rescind the
contract as rescission is only allowed when the party seeking cancellation can restore the original status.
Id. (“[O]ne seeking a cancellation of an instrument, with certain exceptions not pertinent here, must restore
the original status . . . .”). Castillo argues that restoring the original status in this case—the original jury
deliberating toward a verdict—is impossible. But the cases requiring a party to restore the original status
refer to returning money or property received pursuant to the contract. See, e.g., id. at 91 (“[I]t was not
beyond the power of the trial court to require Duval to do equity by returning the money it had received . . .
.”); Tex. Employers Ins. Ass’n v. Kennedy, 143 S.W.2d 583, 585 (Tex. 1940) (“The general equitable rule
is that a plaintiff in a suit for the rescission or cancellation of a contract to which he is a party must return,
or offer to return, any consideration which he has received under the contract.”); Gibson v. Lancaster, 39
S.W. 1078, 1079 (Tex. 1897) (“[I]f any part of the purchase price has been paid, in order to [obtain] a
rescission the money so paid must be tendered by the seller to the purchaser.”). The rule is one of justice,
designed to ensure that parties do not repudiate an agreement while retaining benefits received by reason
of the agreement. See Tex. Co., 281 S.W.2d at 91. We decline to extend the rule to a case such as this.
First, Ford has not unfairly benefitted by receipt of tangible benefits that in equity should be returned in
order for it to assert an equitable remedy. Any benefits Ford received could just as well be said to have
been received by Castillo.  
Ford Motor Co. v. Castillo, No. 06-0875 (Tex. 2009)(Phil Johnson)
(defendant entitled to
opportunity to conduct discovery on affirmative defenses to breach of settlement
claim based on improper juror conduct) (Ford given chance to show it was justified in backing out of
settlement agreement because of allegedly misleading message from jury)

Also see:
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