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WHAT IS AGREEMENT TO RESCIND A CONTRACT

Rescission is an equitable remedy and is discretionary. A court may decline to rescind a contract if one party has affirmed the contract by his action or a third party has acquired some rights or there has been substantial performance in implementing the contract.

Rescission of agreement can either be express or implied. It is implied wherein there is an alteration of prevailing terms and substituted by new terms. Or there can be novation i.e. the substitution of a new contract in place of old one. There can be contractual termination, if the contract expressly provides an option for either of the parties to terminate the contract. This can happen if there is a breach of contract, or occurrence / nonoccurrence of a specified event other than the breach.

WHY IS IT NEEDED

Mutual rescission, or rescission by agreement, is a discharge of both parties from the obligations of a contract by a new agreement made after the execution of the original contract but prior to its performance. The parties to an executory or incomplete contract can rescind it at any time by mutual agreement, even if the contract itself contains a contrary provision. A rescission by mutual assent can properly include a promise by either or both parties to make restitution as part of the contract of rescission. The right to rescind is limited to the parties to the contract or those legally authorized to act for them. As with other contracts, the parties to the rescission agreement must be mentally competent.

The other party is legally entitled to have the contract terminated between two or more persons when there is a misrepresentation by one party. A contract can be rescinded either by release or by agreement. Rescission is fundamentally a method of undoing the injustice to a party.

 
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