Please see emboldened phrase below.
Indemnity for expenses incurred under an obligation
An ancillary order which can also be made along with rescission (even for innocent misrepresentation) is the award of an indemnity. This is a monetary award but should not be confused with damages as it is much more limited. It only covers expenditure which the representee was obliged to incur under the terms of the contract which is being rescinded and which has benefited the other party. It is a restitutionary rather than compensatory remedy and is part of the restitution to the starting position which rescission is designed to achieve. If money has been paid directly to the other party then of course it will be returned as part of the remedy of rescission itself; the indemnity is instead concerned with payments made under the contract to third parties. In Whittington v Seale-Hayne (1900) the indemnity included money paid out in rates and to do repairs which the tenant was obliged to do under the lease and which benefited the landlord directly, but it did not extend to medical expenses and loss of stock which, although foreseeable, were not incurred under an obligation contained in the lease. (These latter, and other items claimed, would only be recoverable if a right to damages could have been established, which at the time would have meant proving fraud—the increased availability of