Definition - What does Rescission mean?

Rescission is when both parties in a contract mutually agree to cancel the contract and relieve themselves from the obligations of the contract.

Once rescission occurs, then neither party is legally required to perform its duties specified by the contract. Instead, each party goes back to how it was before the contract was signed.

Justipedia explains Rescission

If one party wants rescission, and the other does not, then the rescission will not go through. Both parties must agree to rescission for it to be legitimate. If the party who wants a rescission decides not to perform its duties, then the other party can sue it.

There are a number of reasons why parties in a contract may want rescission. For example, a legal problem might be discovered after signing the contract, circumstances may suddenly change, etc.

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