What is rescission in legal terms?

Rescission in legal terms refers to the cancellation of a contract altogether. This legal remedy allows parties to terminate their contractual obligations and return to their positions prior to the contract, as if the agreement had never existed. Rescission can occur for several reasons, including misrepresentation, fraud, undue influence, or mutual mistake.

This remedy is particularly significant because it emphasizes the intention of the parties to avoid settling into an agreement that is fundamentally flawed or unfair. Upon rescission, any benefits that were exchanged under the contract are typically returned, ensuring that no party is unjustly enriched as a result of the canceled agreement.

Understanding this definition of rescission is crucial, as it lays the foundation for situations where a party seeks to nullify a contract due to specific legal grounds, rather than simply modifying its terms, restoring it after a breach, or enforcing damages related to the contract.