Rescission returns both parties to their pre-contractual situation.[1] Rescission is a remedy which allows the “harmed” party, either through unilateral action, or through the institution of a suit in equity, to abrogate or cancel the contract totally, and returns the parties to the position they held prior to the execution of the contract.[2] “A priori, where there has been a valid rescission of the contract, there is no longer any contract and, therefore, no longer a cause of action for breach.”[3] (emphasis added.)
Since rescission voids a contract ab initio, a claim for damages, which must insist upon the existence of the contract, must be barred.[4] Restitution is a form of rescission.[5] Rescission has two aspects: (1) cancellation of a contract of sale; and (2) restitution of the purchase price.[6] Restitution is an appropriate remedy where a contract has been rescinded.[7] The Nevada Supreme Court has unequivocally declared that restitution (rescission) and damages are inconsistent remedies, and that election of one is a bar to the other.[8]
[1] Bergstrom v. Est. of DeVoe, 854 P.2d 860, 861-62 (1993) (Court held that one cannot gain both the benefits of a rescission of a contract and award for damages for breach of that contract).
[2] Great am. Ins. Co. v. Gen. Builders, Inc., 113 Nev. 346, 934 P.2d 257, 262, n.6 (1997).
[3] Id.
[4] Bergstrom v. DeVoe, 109 Nev. 575, 577, 854 P.2d 860, 862 (1993).
[5] Reed v. Sixth Jud. Dist. Ct., 75 Nev. 338, 34, 341 P.2d 100, 101 (1959)
[6] Dan B. Dobbs, Law of Remedies, 552 (2d. Ed. 1993)
[7] Id.
[8] Mullinix, 81 Nev. At 454; See also Norris, 225 P.2d at 268; SJS Inv., 597 N.E.2d at 1215; Timmons, 601 S.W.2d at 689; Loflin v. Blume, 1198 WL 132679 (Tenn. Ct. App. 1998); In re Zimmermann v. Thompson, 114 N.W.2d 116, 117 (Wis. 1962); Mansfield v. Smith, 277 N.W.2d 740, 748 (Wis. 1979).
Hon. Jay Young (Ret.) is a retired judicial officer with decades of experience presiding over complex civil litigation matters. Following a distinguished career on the bench, Judge Young now serves as a mediator, arbitrator, and court‑appointed special master, and discovery referee. Judge Young brings a disciplined, impartial, and results‑oriented approach to dispute resolution. Judge Young is based in Nevada and accepts appointments statewide and nationally, subject to agreement or court order. He can be reached at 855.777.4557 or info@armadr.com
Known for judicial temperament, analytical rigor, and practical problem‑solving, Judge Young assists litigants and counsel in resolving high‑stakes disputes efficiently and with integrity and employing best practices. He is recognized by U.S. News and World Report’s publication Best Lawyers as Arbitration Lawyer of the Year.