What does it mean to rescind a contract?

To rescind a contract means to cancel or annul the agreement between the parties involved. This legal action effectively terminates the contract and releases the parties from their obligations under that agreement. Rescission may occur for several reasons, such as mutual consent, a mistake, misrepresentation, incapacity, or undue influence. When a contract is rescinded, it is as if the contract never existed, allowing both parties to revert to their pre-contractual positions.

Understanding this concept is important because rescission is a remedy that aims to protect parties from unfair situations or contract terms that might be found to be unjust or improperly formed. In a legal context, rescission can also imply that any benefits received under the contract must be returned, which emphasizes the aim of restoring both parties to their original state as if the contract had never been made.