Florida businesses may seek rescission of a contract in certain circumstances when the contract was entered into because of fraud, accident, or a mistake of facts. To preserve the legal right to invoke the remedy of rescission, when the basis for rescission is discover must immediately reject any further benefits under the contract and must usually offer to restore the other party to the same position that it was in prior to entering into the contract. Peter Mavrick is a Fort Lauderdale business litigation attorney, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.
After entering into a contract, a Florida business may discover something that reveals that it was a mistake to enter into the contract. “Courts of equity will rescind an instrument based upon fraud, accident[,] or mistake.” Bass v. Farish, 616 So. 2d 1146 (Fla. 4th DCA 1993). Rescission allows a business to essentially undo a contract. The remedy of rescission allows a Florida business to return to the same position it was in before entering into the contract in certain circumstances. “The prime object of rescission is ‘to undo the original transaction and restore the former status’ of the parties.” Billian v. Mobil Corp., 710 So. 2d 984 (Fla. 4th DCA 1998).
Under Florida law, a business cannot receive the benefit of a contract while simultaneously repudiating that same contract. A party to a contract can waive its right to rescission if it “retains the benefits of a contract after discovering the grounds for rescission.” Mazzoni Farms, Inc. v. E.I. DuPont De Nemours & Co., 761 So. 2d 306 (Fla. 2000). To obtain rescission, a party to a contract must show that it, “with reasonable promptness, denied the contract as binding upon him and that thereafter he was consistent in his course of disavowal of it.” Rood Co. v. Board of Pub. Instruction, 102 So.2d 139 (Fla.1958); Steinberg v. Bay Terrace Apartment Hotel, Inc.,375 So.2d 1089 (Fla. 3d DCA 1979) (“[T]he remedy of rescission is clearly not favored by the courts, particularly when the complaining party has failed to promptly deny the contract as binding upon him and failed to follow a course of conduct manifesting a disavowal of it”). By staying silent or acting as if the contract is still in effect, the party seeking rescission “will be bound by the contract in the same manner as if the [basis for rescission] had not occurred.” Rood Co. v. Board of Pub. Instruction, 102 So.2d 139 (Fla.1958). AVVA-BC, LLC v. Amiel, 25 So. 3d 7 (Fla. 3d DCA 2009) (refusing rescission when purchase of business where landlord did not accept assignment but the business continued to operate).