It has been pointed out (l) that, where either party to the contract commits such a breach of it as discharges the other from his obligation under the agreement, the other is entitled, at his election, either to rescind the contract or to affirm it and sue upon it for damages for the breach. If he elect to rescind, he is entitled to take active proceedings in equity to assert his right and to secure entire restitution (m); and he is entitled to sue at law, independently of the contract, to recover any money paid or property transferred by him thereunder (n), and also, it seems, to recover any money necessarily expended by him in discharging any obligation imposed on him by the agreement (o). Thus a purchaser rescinding the contract for the vendor's failure to show a good title may recover his deposit, if any, or any other sum paid on account of the purchase money, together with interest thereon at four per cent. per annum (p); and a vendor who has delivered over possession before completion and rescinds for the purchaser's failure to pay the price, may recover possession of the land sold. And it appears that either party lawfully rescinding the contract for the other's breach is entitled to recover his expenses incurred in discharge of any obligation imposed on him by the contract, as of the investigation of title (q), though it is questionable whether he is entitled to be recouped his expenses of entering into the agreement (r). The purchaser so rescinding the contract has an equitable lien on the land sold for any money paid to the vendor by way of deposit or otherwise on account of the purchase money, and interest thereon (s), and also, it seems, for his expenses incurred in pursuance of the contract (t). And this lien arises in every case of lawful rescission by the purchaser (u), including rescission under a power in that behalf expressly reserved to him by the contract (r). The purchaser's lien in these respects is a right exactly similar to and enforceable in the same manner as the vendor's lien for unpaid purchase money (x).

Rights of a party rescinding the con-tract on the other's breach.

(f) Above, pp. 540, 577, 578, 695, 722 sq.

{g) Above, pp. 55, 540, 642 - 644.

(h) Above, pp. 540, 576 - 578, 728, 732, 736.

(i) Above, pp. 575 sq.

(k) Above, pp. 582 - 584; Sug. V. &P. 551.

(l) Above, p. 936.

(m) Mackreth v. Marlar, 1 Cox, 259; King v. King, 1 My. & K. 442. It is submitted that the former of these cases establishes that one entitled to rescind a contract for the other party's breach of it may sue as plaintiff in equity to enforce this right, as in case of rescission for a misrepresentation (above, pp. 728, 730), but must, as a rule, make entire restitution. The question, not contested in that case, of an exception occurring in the case of a deposit, is discussed below, pp. 951 - 953, and n. (f). In the latter case (approved in Hope v. Hope, 22

Beav. 351, 365) a purchaser let into possession before completion received notice that it was impossible for the vendor to make a good title, but he declined either to quit possession or to accept such title as the vendor could give and pay the purchase money; and it was held, as he would not accept the latter alternative, that he must give up possession and account for all rents and profits received by him. A fortiori, it is thought, a vendor rescinding for the purchaser's breach of contract and not being himself in default must be entitled in equity to exact the like restitution as he is bound to make. The equitable right to take active proceedings to rescind a contract of sale for the other party's default is also illustrated where the defendant to an action for specific performance fails to comply with a judgment against him. In this case the plaintiff may, at his election, move in the action to have the contract rescinded and to obtain restitutio in integrum; Foligno v. Martin, 16 Beav. 586; Clark v. Wallis, 35 Beav. 460; Henty v. Schroder, 12 Ch. D. 666; Hutchings v. Humphreys, 54 L. J. Ch. 650, 652; Olde v. Olde, 1904, 1 Ch. 35; Fry, Sp. Perf. Sec. 1171 - 1173, pp. 530 - 532, 3rd ed.

(n) Above, p. 936.

(o) De Bernardy v. Harding, 8 Ex. 822, 824.

(p) At law, the deposit or any other sum of money paid on account of the purchase money could only be recovered without interest by a purchaser rescinding the contract in an action for money had and received, unless a written demand claiming payment of interest had been made under stat. 3 & 4 Will. IV. c. 42, s. 28; Walker v. Constable, 1 Bos. & Pul. 306; Flight v. Booth, 1 Bing. N. C. 370; Frühling v. Sehroeder, 2 Bing. N. C. 77, 80; 2 Dart, V. & P. 949, 5th ed. But in equity the purchaser rescinding the contract was entitled to have his deposit or any other sum paid on account of the purchase money returned to him with interest at four per cent.; see cases cited above, note (m). And under the present practice the purchaser rescinding the contract may recover interest according to the rule of equity without having made any demand or claim under the above-mentioned statute; see cases cited above, p. 937, n. (y). (q) Kitton v. Hewett, 1904, W. N. 21; 2 Dart, V. & P. 945, n. (b), 957, n. (n), 5th ed.; and consider Camfield v. Gilbert, 4 Esp. 221, 223; De Bernardy v. Harding, 8 Ex. 822, 824; and the facts that such expenses may be recovered by a party rescinding the contract for innocent misrepresentation and that at common law rescission for an innocent misrepresentation could only take place by way of rescission for breach of an essential stipulation forming part of the contract; above, pp. 724 - 728, 731, 750, 751. And in several cases where, on a Purchaser's lien for the deposit, etc.

As any party rescinding the contract for the other's breach is entitled to be restored to his former position, so, it is conceived, he is in general bound to return to the other any property or profit which he has himself received under the partial execution of the agreement. It is thought that in every case in which a party to a contract lawfully rescinds it, whether for the other party's breach of some stipulation, which goes to the root of the whole consideration (z), for the other's renunciation of the contract (a), for non-fulfilment of some condition subsequent, under an express power to rescind (b), or for misrepresentation, duress, or undue influence (c), the rule is that he shall not enjoy the advantage of rescission without yielding up every benefit he has taken by the previous part-performance of the contract (d). But an exception to this rule occurs, with regard to a deposit paid on a sale of land to the vendor, or his agent, where the vendor lawfully rescinds the contract for the purchaser's breach or renunciation of it. In this case the vendor is generally entitled to retain the deposit, which was paid to him partly as a guarantee for the purchaser's due performance of the agreement, and was intended to be forfeited if the purchaser should break the contract; and the purchaser cannot recover it back from him (c). And it is submitted that the vendor is equally entitled to the deposit, on rescinding the contract for the purchaser's breach or renunciation of it, where the deposit has been paid to a stakeholder without special provision for its application. In this case also the parties' intention appears to be that the sum deposited shall be held by the stakeholder, not only to abide the event of completion of the contract, but also as a guarantee for the purchaser's due performance of the agreement, and to be forfeited to the vendor if the purchaser make default (f). But it appears that this exception applies only to money paid as a deposit, that is, in earnest or as a guarantee for the payer's due performance of the contract, and does not extend to other sums of money paid on account of the purchase money (g). And the question, whether the deposit is to be forfeited on the purchaser's default, is one of the parties' intention to be gathered from the whole agreement; so if the contract contain any clause inconsistent with such an intention, it will be excluded (h). The principle governing the case of the forfeiture on the purchaser's default of a deposit paid by him on signing a contract for the sale of land has been applied where other property is transferred by a party to a contract as a guarantee for his due performance of his agreement. Thus where a builder had made default in performing a building-agreement, containing a stipulation that all plant and materials brought by him on to the land to be built on should be considered the property of the landowner until completion of the contract, it was held that he had no right to recover the property from the landowner (i).