In contract law, rescission (to rescind or set aside a contract) refers to the cancellation of the contract between the parties. This is done to bring the parties as far as possible to the position they were before they entered into a contract. This an equitable remedy and is discretionary. The court may decline to rescind a contract if one party has affirmed the contract by his action (see Long v Lloyd) or a third party has acquired some rights or there has been substantial performance in implementing the contract. For the actors guilds called equity, see Actors Equity Association (U.S.) or British Actors Equity Association (U.K.). For equity as the value of an ownership interest in property, see ownership equity. ...
Rescission is commonly said to "unwind" a contract; it is obvious, but important, to note that rescission disaffirms the contract (while most actions in contract, at least implicitly, affirm the existence and enforceability of the contract).
One generally-respected text states, "[r]escission is available as a remedy for failure to form a contract because of lack of mutual assent and for breach of a validly formed and existing contract." This comment is, however, misleading for a number of reasons.
Rescission of a contract is premised on its disaffirmance; thus, it would be inconsistent for a party to rescind (disaffirm) and, at the same time, to recover damages (based on affirmance of the contract).
Rescission may be brought about by the mutual consent of the parties, by the conduct of the parties or by a decree by a court of equity.
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.
Rescission by mutual assent is separate from the right of one of the parties to rescind or cancel the contract for cause, or pursuant to a provision in the contract.
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