As a professional, I am happy to provide you with an article on “what does rescission of contract mean.”

What is Rescission of Contract?

Rescission of contract, also known as contract cancellation, refers to the nullification of a contract by either party involved. It means that both parties involved in a contract are released from their contractual obligations, and the contract becomes void. Rescission of contract can happen voluntarily or involuntarily, and it may happen due to various reasons.

Voluntary Rescission of Contract

Voluntary rescission of contract is when both parties involved in a contract agree to terminate the agreement. This can happen when either party is unable to fulfill their obligations. In such cases, the parties may decide to cancel the contract mutually and seek damages if any. Voluntary rescission of contract can also happen when parties mutually agree that the contract is no longer necessary, or when one party is willing to pay compensation to the other to cancel the contract.

Involuntary Rescission of Contract

Involuntary rescission of contract happens when one party to the contract seeks to rescind the contract because the other party has breached the contract`s terms. In such cases, the party may seek to rescind the contract and recover damages.

For example, if a company contracts a supplier to provide it with raw materials within a specific timeframe and the supplier fails to deliver the materials as specified, the company may seek to rescind the contract and recover damages for breach of contract.

Consequences of Rescission of Contract

When a contract is rescinded, it becomes void, and both parties are released from their contractual obligations. The parties are also entitled to recover damages in cases where there has been a breach of contract. The parties may also seek to negotiate a new contract or enter into a new agreement.

Conclusion

Rescission of contract is a legal term used to refer to the nullification of an agreement by either party involved in a contract. It can happen voluntarily or involuntarily, and it may occur due to various reasons, such as breach of contract, mutual agreement, or compensation. When a contract is rescinded, both parties are released from their contractual obligations, and they may seek to recover damages or enter into a new agreement. It is essential to understand the implications of rescinding a contract before signing any agreement.