Rescission (Rescindibility)

RESCISSION (RESCINDIBILITY). - Rescission is a means of preventing or removing the effects of an act that is valid in itself, in which the proper proportion between the parties has not been observed.

A valid juridical transaction may carry within its very constitution a cause of disintegration. In this it is completely different from one that is invalid, that is, null (v. NULLITY) from its very inception. In the Italian Civil Code, contracts with reciprocal performances are rescindable under arts. 1447-52, and so is the division of hereditary property under arts. 763-68. Accordingly, rescission as it presents itself today in Italian law is distinguished from nullity and the consequent declaration, as also from voidability, although it may be regarded as a subspecies of the latter.

1. Rescission of contracts proper

Italian legislation admits two kinds: the rescission of a contract concluded in a state of peril by one of the two parties, and rescission for lesion. The first is regulated in art. 1447, the second in art. 1448. The conditions that must be met for a contract to be rescinded are not identical in the two cases; a) the rescission of a contract concluded in a state of peril presupposes an unjust bargain between the contracting parties, due in the one to bad faith (and therefore to knowledge of the other party's state of peril) and in the other to the necessity of facing the peril. The obligation arising from it is regarded by law as an obligation assumed under iniquitous conditions; and it operates even in the case where it came about in order to save a third party, for example, one's father. Generally, the will, at least implicit, to abuse the other's state of necessity or peril is required in the opposing party. The law does not determine the disproportion capable of creating the iniquitous conditions; hence practice, custom, and jurisprudence will determine in concrete terms when it occurs, and naturally the evidentness of the fact. This rescission can be sought only by the injured party and within one year of the conclusion of the contract (save as provided in art. 1449, para. 1); with the limitation of the action, the path to the corresponding defense is also barred. Although a rescindable contract can never be ratified (art. 1451), it is permitted that "the contracting party against whom rescission is sought may avoid it by offering a modification of the contract sufficient to restore it to equity" (art. 1450), which in the end is the very purpose of the rescission of contracts. Nevertheless, "the rescission of the contract does not prejudice the rights acquired by third parties" before the transcription of the claim (art. 1452). b) The rescission of contracts on account of lesion occurs when (art. 1448) there is a disproportion between the performance of one party and that of the other, and the disproportion has depended on the state of need of one party, of which the other has taken advantage to derive benefit. In this case, unlike the preceding one, the law itself therefore determines how great the disproportion must be, establishing that the lesion must continue at the moment when the claim for rescission is brought (ibid., para. 3). As a logical consequence of the facts, all aleatory contracts, provided they are valid, are excluded from the benefit of rescission, since it is more than natural that there be a disproportion, often enormous, between what is given and what had been promised. The rules governing the time allowed for bringing the action or the defense, the possibility of modifying the contract, the inadmissibility of ratifying the injurious act, and the effects with regard to rights acquired by third parties, are identical to those governing the rescission of contracts stipulated in a state of peril. It should also be noted that in both cases "the judge, in pronouncing rescission, may, according to the circumstances, award fair compensation to the other party for the work performed" (art. 1447); which is consonant with natural law.

2. In the matter of the division of hereditary property

The preceding rules and those referred to in art. 763 ff. are applied analogously. For this reason rescission may be obtained if the sum of the property to which the subject is entitled is less by more than a quarter than that of the other co-heirs (art. 763); the rule applies, where the same disproportion exists, even in the case in which the division was personally indicated by the testator (ibid.); however, "the co-heir against whom the action for rescission is brought may halt its course and prevent a new division by giving the supplement of the hereditary portion, in money or in kind, to the plaintiff or to the other co-heirs who have joined with him" (art. 767); in the event of failure to bring it within the time allowed, that is, within two years (art. 763), the action for rescission is barred; which also occurs in the case of a settlement by which the disputes arising in relation to the division or another act replacing it have been brought to an end (art. 764). It is also established that "the action for rescission is admitted against any other act having the effect of terminating among the co-heirs the community of hereditary property" (art. 764), although these acts do not constitute divisions proper. So that equity may be fully observed in the modification of the division, "in order to ascertain whether there is lesion, an appraisal of the property is carried out according to its condition and value at the time of the division" (art. 766).

In the CIC, if one excepts restitutio in integrum (cann. 1687-89), the ordinary means for every dissolution of a contract or juridical act of whatever nature is rescission. The action for rescission is granted to one who validly performed the act under the pressure of a grave fear unjustly inflicted or through fraud, after he has proved one or the other of these states (can. 1648 § 1); analogously to the Civil Code, the CIC admits the same action within a two-year period in favor of one who was injured by error beyond half the value of the object (§ 2). The action for rescission is admitted not only against the one who induced the fear or caused the fraud, even if only in favor of third parties (can. 1685 no. 1), but also against any possessor, whether in good or in bad faith, who holds the object thus extorted (no. 2). The defense granted exclusively against the author of the fear or of the fraud (and therefore not against possessors or holders) who may eventually demand the performance of the contract or act is by its nature perpetual (can. 1686). Practically, with regard to the CIC, it will suffice to hold that every act of whatever nature which, initially valid, may at a given moment for any reason contemplated by law be considered, in its effects or in its very existence, as not having occurred and therefore dissolved, is rescindable. This rescission, however, is sometimes not possible, whether by disposition of the CIC itself or by natural law or by divine law. Unfortunately, some state legislations do not always take due account of this; a painfully classic example is divorce, granted against a valid marriage even if not consummated.

The aforesaid rules are to be observed in ecclesiastical tribunals, whenever actions for rescission are conducted before them. Can. 1529 recalls, however, that in other cases everything established by the civil laws of the respective States on contracts and their rescission holds also for canon law, even in ecclesiastical matters, unless it is contrary to divine law or to some mandatory norm of the CIC.

Lorenzo Simeone