The Delaware Court of Chancery has dismissed a rescission claim asking the court to undo the sale of a gelato franchise after the buyer alleged the seller misrepresented the business’s financial health. In issuing the dismissal, the court held it had no jurisdiction in this case because an equity court can only grant rescission to restore the parties to the same position they occupied before signing the contract.
“If a plaintiff is seeking the remedy of rescission, the status quo ante of the plaintiff and of the defendant as well must be restored,” said Master-in-Chancery Kim E. Ayvazian in Kostyszyn v. Martuscelli. “If that result cannot be substantially accomplished, rescission as an equitable remedy will be denied.”
