Also known as: rescission · rescind · rescinded · rescinding · rescinds · contract rescission · rescission of contract
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
An agreement between contracting parties that discharges all remaining duties of performance under their existing contract. The agreement may be oral unless it involves a transfer of property subject to the Statute of Frauds.
An agreement between contracting parties that discharges all remaining duties of performance under their existing contract. The agreement may be oral unless it involves a transfer of property subject to the Statute of Frauds.
Luke Latham and Leonard Lowe entered a written services contract. Later they met and orally agreed to cancel the deal before any performance occurred. The oral agreement of rescission discharged all remaining duties even though the original contract fell within the Statute of Frauds.
Lars Lindstrom held a power of attorney for his elderly aunt. He negotiated with a supplier to rescind an equipment lease the aunt had signed. The rescission was within the agent's statutory authority to cancel contracts on the principal's behalf.
A judicial decree at law that sets aside a contract and restores the parties to their pre-contractual positions. The decree is available when a party properly tenders any benefits received and satisfies the requirements for avoidance at law rather than in equity.
Luna Lang contracted to buy a parcel from Landmark Realty. A recorded lien remained unreleased at closing. Lang tendered the purchase price subject to clear title and then refused to close. Because the lien rendered title unmarketable, Lang obtained legal rescission of the contract and recovered her deposit.
A judicial decree at law that sets aside a contract and restores the parties to their pre-contractual positions. The decree is available when a party properly tenders any benefits received and satisfies the requirements for avoidance at law rather than in equity.
Each sense below has its own examples, sources, and questions.
An oral agreement of rescission discharges unperformed duties under an enforceable contract even if the original contract was within the Statute. The Statute may still apply if the rescission itself transfers an interest in land.
Lorenzo Lugo received a bequest under his uncle's will. The will contained a no-contest clause. Lugo filed a probate challenge without probable cause. The court enforced the clause and decreed legal rescission of the gift to Lugo.
Liam Larson signed an acknowledgment of parentage for a child. Within the statutory window he filed a timely rescission action under the Uniform Parentage Act. The court granted rescission and vacated the acknowledgment.
Lone Peak Energy was formed by promoters who sold their own equipment to the corporation at a secret profit. The corporation discovered the nondisclosure after formation. It sued and obtained legal rescission of the equipment sale for breach of fiduciary duty.
Legal rescission is effected by the parties' agreement or by a judgment at law after proper tender of benefits received. Equitable rescission is a discretionary decree from a court of equity that may not require the same formal tender. Modern merger of law and equity has reduced the practical difference, yet the distinction still affects whether a party may avoid the contract as a matter of right.
A buyer may rescind when title contains unreleased liens, breaks in the chain, or other defects that would cause a prudent purchaser to reject it. The seller must be unable or unwilling to cure by closing. Rescission restores the deposit and discharges the duty to purchase.
The corporation may elect to rescind the transaction or recover the secret profit. Full disclosure to and approval by all contemplated original investors is required to avoid liability.
…(1993) (requiring disclosure of repairs costing more than 5 percent of suggested retail price and prohibiting revocation or rescission of sales contract on the basis of less costly repairs); Okla. Stat., Tit. 47, § 1112.1 (1991) (defining "material" damage to a car as damage requiring repairs costing in excess of 3 percent…