restitutio in integrum

Restitutio in integrum is the process of putting parties in the position they would have been in, if the transaction in question never took place. Both sides of the transaction must be undone for this to be possible. It is relevant in assessing whether the equitable remedy of rescission is available.

For instance, where a mortgage is set aside and money was paid for the mortgage, restitutio in integrum would require setting aside the mortgage and ordering that money paid towards the mortgage is repaid.

If property has been transferred to a bona fide purchaser for value without notice and cannot be recovered, then the remedy of rescission will not be available, unless the court is prepared to make an order for pecuniary rescission. This dispensation is only available where the innocent party is not at fault. In essence, a payment is substituted for setting aside a transfer of property.

Usage: Restitutio in integrum must be possible for the remedy of rescission to be available to a party to litigation.

Related Words: rescission; equitable remedies; court of equity; fiduicary duty; account of profits; equitable damages; constructive trust.