Drafting, Pleadings and Appearances · Commercial Contract Management

Rescission of a Voidable Contract under Section 64

Updated 11 October 2026 · Fact-checked

A voidable contract is valid until the party entitled to avoid it rescinds it. Under Section 64, once rescinded, the other party need not perform his promises. The rescinding party must restore, so far as may be, any benefit he received to the person it came from. Exam answers follow provision, facts, conclusion.

Understand Rescission of Voidable Contracts (Section 64)

A voidable contract is an agreement that can be enforced by one party but avoided by the other. The right to avoid belongs to the party whose consent was not free, or who was prevented from performing (for example, Section 53). Until that party rescinds, the contract stands and is valid.

A void agreement is different. It has no legal effect from the start, or it becomes void later. No one has to choose to cancel it. Section 65 deals with void agreements: a person who has received an advantage must restore it or compensate for it. Section 64 deals with voidable contracts that are rescinded. Keep the two sections apart.

Section 64 has two limbs. First, when the person at whose option the contract is voidable rescinds it, the other party need not perform any promise in which he is the promisor. Second, the party rescinding must restore, so far as may be, any benefit he has received under the contract to the person from whom he received it. The rule is fairness: you cannot cancel the deal and also keep what you got from it.

How is rescission done? Section 66 says rescission may be communicated or revoked in the same manner, and subject to the same rules, as apply to communicating or revoking a proposal. So the rescinding party should give clear notice to the other side, in writing, in practice. Rescission can also be sought from the court under Section 27 of the Specific Relief Act, 1963, where the contract is voidable or terminable by the plaintiff.

Rescission is not always available. The court may refuse it where the plaintiff has ratified the contract, where the parties cannot be substantially restored to their earlier position owing to change of circumstances, where third parties have acquired rights in good faith, without notice and for value, or where only a non-severable part is sought to be rescinded. The pledge rule in Section 178A is a related example: a pawnee who acts in good faith and without notice gets a good title from a pawnor who held the goods under a voidable contract not yet rescinded.

Key rules to remember

Section 64, first limb: Voidable contract rescinded ⇒ other party need not perform his promises; Applies when the person at whose option the contract is voidable rescinds it. The other party is released from promises where he is promisor.
Section 64, second limb: Rescinding party must restore benefit received, so far as may be, to the person from whom it was received; Restoration is 'so far as may be'. It is not an absolute duty where exact restoration is impossible.
Section 66: Rescission is communicated or revoked like a proposal; Notice must reach the other party. It can be revoked before it is complete, under the rules of Sections 3 and 5.
Section 65 contrast: Agreement discovered void / contract becomes void ⇒ restore advantage or compensate; Applies to void agreements, not to rescission of voidable contracts.
Specific Relief Act, Section 27(2): Court may refuse rescission: ratification; no substantial restoration; good-faith third party rights for value; non-severable part; Use these grounds when the facts show delay, affirmation, resale or part rescission.
Specific Relief Act, Section 30: On rescission, court may require restoration of benefit and compensation as justice requires; Court-ordered equity. Section 33 gives similar powers on cancellation of an instrument.

How to solve Rescission of Voidable Contracts (Section 64) questions

Use this method for any case question on rescission of a voidable contract. Write it in the order provision, facts, conclusion.

1Identify whether the contract is voidable or void. Look for the cause: coercion, undue influence, fraud, misrepresentation, or prevention by the other party (Section 53).
2Name the party who has the option to rescind. Only that party can avoid the contract.
3State Section 64 in plain words: the other party need not perform his promises, and the rescinding party restores benefits received.
4Check how and when rescission was communicated. Apply Section 66: same manner and rules as a proposal.
5List the benefits received by each side. Decide what can be returned 'so far as may be' and what needs money compensation.
6Check bars to rescission: ratification, change of circumstances, good-faith third party rights, non-severable part. Cite Section 27 of the Specific Relief Act if a court is involved.
7Write a clear conclusion with the consequences for each party. Add the practical step, such as a notice of rescission or a plaint.

Quickest way: Four-line rescission answer

When to use it: Use when time is short and the question asks for the consequences of rescission on given facts.

Line 1: Contract is voidable at the option of X because of (ground). X has rescinded.
Line 2: Under Section 64, Y need not perform his promises.
Line 3: X must restore the benefit received from Y, so far as may be.
Line 4: Rescission may fail if X ratified, parties cannot be restored, or a good-faith third party acquired rights.

Common mistakes in Rescission of Voidable Contracts (Section 64)

Applying Section 65 to a rescinded voidable contract.
Both sections talk about restoring benefits, so they look alike.
Fix: Use Section 64 when a voidable contract is rescinded. Use Section 65 when an agreement is discovered void or a contract becomes void.
Saying a voidable contract is void from the start.
Students mix up 'voidable' and 'void'.
Fix: Say it is valid and enforceable until the entitled party rescinds it.
Saying both parties can rescind.
Students think rescission is mutual.
Fix: Only the party at whose option the contract is voidable can rescind. Mutual cancellation is a different matter under Section 62.
Forgetting that the rescinding party must restore benefits.
Students focus on the other party being released.
Fix: Always write both limbs of Section 64. Mention the words 'so far as may be'.
Ignoring bars such as ratification or third party rights.
The question seems to ask only for the Section 64 effect.
Fix: Scan the facts for delay, affirmation, resale to an innocent buyer or part rescission, and mention Section 27(2) of the Specific Relief Act.
Ignoring how rescission is communicated.
Students treat rescission as automatic.
Fix: State that Section 66 requires communication like a proposal, and recommend written notice.

Worked examples

Example 1

Meera Textiles Pvt. Ltd. bought machinery from Rajan Engineering for ₹12,00,000 on the basis of a fraudulent statement by Rajan about the machine's capacity. Meera paid ₹4,00,000 in advance and took delivery. On discovering the fraud, Meera gave written notice rescinding the contract. Advise on the consequences.

Show the solution

Provision: A contract caused by fraud is voidable at the option of the deceived party. On rescission, Section 64 releases the other party from performing his promises, and the rescinding party must restore any benefit received, so far as may be.
Facts: Meera is the party with the option. It gave written notice, which is a valid mode of communication under Section 66.
Effect on Rajan: He need not perform any promise in which he is promisor under the contract.
Effect on Meera: It received the machinery, which is a benefit from Rajan. It must return the machinery, so far as may be, to Rajan.
Advance: Section 64 does not itself say that the rescinding party gets back money it paid. Meera may seek refund of the ₹4,00,000 as restitution, since Rajan should not keep the price of a contract that has been avoided. If the matter goes to court, the court may require restoration of benefit and compensation as justice requires under Section 30 of the Specific Relief Act.
Bars: Check that Meera did not ratify by continuing to use the machine after discovering the fraud, and that no third party acquired rights in good faith.

Answer: The contract is validly rescinded. Rajan is released from his promises. Meera must return the machinery, so far as may be. Meera may seek refund of its advance of ₹4,00,000 as restitution, or as equitable relief under Section 30 of the Specific Relief Act; this refund is not an automatic result of Section 64. Rescission may be refused only if Meera ratified the contract or a bar under Section 27(2) of the Specific Relief Act applies.

Example 2

Anil was induced by Sunil's misrepresentation to buy goods worth ₹80,000 and received them. Before Anil rescinded the contract, he resold half the goods to Karan, who bought in good faith for value and without notice of the misrepresentation. Anil now rescinds the contract. Discuss Anil's duty to restore benefits.

Show the solution

Provision: Section 64 requires the rescinding party to restore the benefit received, so far as may be, to the person from whom he received it.
Facts: Anil received the goods from Sunil under a voidable contract and resold half to Karan before rescinding. Karan bought in good faith, for value and without notice.
Unsold goods: Anil must return the remaining half to Sunil.
Resold goods and Karan: Karan's title does not come from Section 64 or from Section 27. It comes from the rule for sales by a person who holds goods under a voidable contract that has not been rescinded at the time of sale. Under Section 29 of the Sale of Goods Act, 1930, a buyer who acts in good faith and without notice of the seller's defect of title gets a good title. Sunil cannot recover the resold goods from Karan.
Court route: If Sunil or Anil goes to court, Section 27(2)(c) of the Specific Relief Act lets the court refuse rescission as to the resold goods, because a third party has acquired rights in good faith, without notice and for value.
Value of the resold half: Exact restoration of these goods is not possible. The words 'so far as may be' point to money compensation for what cannot be returned. The court may require it under Section 30 of the Specific Relief Act. On the purchase price, half of ₹80,000 is ₹40,000, subject to proof of the actual value.
Practical step: Anil should give written notice of rescission to Sunil, return the unsold goods and settle the value of the resold goods.

Answer: Anil must return the unsold half to Sunil. Karan keeps good title to the resold half, because he bought in good faith, for value and without notice before rescission (Section 29 of the Sale of Goods Act, 1930). A court may also refuse rescission as to those goods under Section 27(2)(c) of the Specific Relief Act. For the resold half, Anil should make compensation as justice requires, since restoration is only 'so far as may be'.

Exam tips

Write the section in plain words first, then apply it to the facts. Do not just quote.
Always show both limbs of Section 64: release of the other party and restoration of benefit.
Contrast Section 64 with Section 65 in one line when the question mentions void and voidable.
For drafting questions, include the notice of rescission: parties, ground, date of contract, benefit to be returned and a time limit.
Mention Sections 27 and 30 of the Specific Relief Act when the facts involve a court suit.

Practice questions from Commercial Contract Management

Rescission of Voidable Contracts (Section 64): frequently asked questions

What is the difference between void and voidable contracts?

A void agreement has no legal effect, and Section 65 requires restoration of any advantage received. A voidable contract is valid until the party entitled to avoid it rescinds it. After rescission, Section 64 applies.

What does Section 64 of the Indian Contract Act say?

When the person at whose option a contract is voidable rescinds it, the other party need not perform any promise where he is promisor. The rescinding party must restore any benefit received, so far as may be, to the person from whom it was received.

How do you rescind a voidable contract in India?

Under Section 66, you communicate rescission in the same manner as a proposal. In practice, send a clear written notice to the other party. If the other side disputes it, you can sue for rescission under Section 27 of the Specific Relief Act, 1963.

Can a court refuse rescission?

Yes. Under Section 27(2) of the Specific Relief Act, the court may refuse where the plaintiff ratified the contract, where the parties cannot be substantially restored, where third parties acquired rights in good faith for value, or where only a non-severable part is sought to be rescinded.