What is a rescission of a contract?

A rescission of a contract is an action that is taken to end an existing contract. In California, the rescission process allows parties to a contract to cancel the agreement and go back to the same state they were in before the agreement was made. The main difference between rescission and a breach of contract is that breach of contract requires one party to go through the court system to seek damages for any damages incurred. When rescission occurs, all parties to the contract must return any benefits both parties received from the original agreement. For example, if a tenant rents an apartment from a landlord and decides to rescind their contract, the tenant would be required to return the keys to the landlord and return any security deposits paid by the tenant. At the same time, the landlord must refund any rent or security deposits paid by the tenant. In order for a rescission to be binding and legally accepted, both parties must agree to it and a written agreement must be signed. The agreement should include the terms of rescission and any details regarding the payment of any funds that were exchanged under the original contract. Rescission can be beneficial in some cases because it provides a way for both parties to cancel the agreement without court intervention or the risk of costly legal fees. It also gives both parties a chance to start fresh and negotiate a new agreement. With that being said, rescission should not be taken lightly and should only be done when both parties are in agreement.

Related FAQs

What is a third-party beneficiary?
What is the implied covenant of quiet enjoyment?
What is a material breach of contract?
What is an assignment of contract?
What is the difference between a covenant and a contract?
What is a contingent contract?
What is controverting the evidence?
What is a term in a contract?
What is a liquidated damages clause?
What is the effect of illegality in a contract?

What is a rescission of a contract?

Related FAQs

Related Blog Posts