what does rescind a contract mean ?

Law Contract Law

A contract, be it of any kind, involves a lot of terms, conditions, and clauses. The contract is formed only after all the parties participating in the transaction agree to all the clauses. A contract serves as a set of guidelines to be taken care of while completing a transaction.

However, we often see that the contracts are terminated between the parties for several reasons. In some cases, the termination of a contract is based on mutual consent from all the parties. Today, in this article, we shall be talking about everything you should know about the rescission of a contract and the rights to rescind the contract. Read on to learn more about it.


Before we talk about the rights to rescind the contract, let us first understand what it means. 'rescind' means 'revoke', 'cancel', or 'reverse'. Using the term regarding contracts would mean an 'unmaking of an agreement between the participating parties.

To explain in simple terms, it means the cancellation of a contract by one party. If any party wants to rescind a contract, he should communicate it to the other parties like he did when offering the warranty. If you revoke a contract, you will be back in your position before you agree.

Every country provides a right to rescind a contract and has a different set of terms of conditions for the same.

When Can A Contract Be Rescinded?

While executing a contract, the parties involved in the transactions are sure to have expectations from each other. However, there might be several occasions when you want to terminate the contract. If you also want to do the same, there are several cases when you can do the same. We list some of them for you.

In Case Of A Fraud

If you have entered a contract but have been subjected to fraud by one or more parties entering the agreement, you will be given an option to perform rescission of the contract. In this case, you will not need an understanding of other participating parties if you can prove the fraud.

Quality Of Service

Before entering into a contract, if you have specified the clause for a minimum quality of service or timelines and the other party does not meet them, you will have a right to terminate the contract. However, for this, you might have to provide advance notice to the other party, and in some cases, you might even need approval from a regulator.

Mutual Consent

If all the parties involved in a contract agree to rescind an agreement, a separate written document can indicate mutual consent or an intent to revoke the contract. However, in a deal, if only one party wants to rescind the agreement, he must give appropriate written notification of the legal reason because of which he is requesting the withdrawal. In such cases, a court might have to intervene and determine if the contract can be rescinded.

How To Rescind A Contract?

If you want to rescind a contract, several steps to it. Some contracts come with an option that allows parties to end the contract, while others don't have any facility. There are different ways to rescind contracts based on the conditions; some of which we mention below:

Clause In The Contract Document

You need to check the contract to see if there is a clause that facilitates terminating a contract. If yes, then there should not be any significant challenges. However, if there is no such clause in the agreement, then you might have to contact an attorney who might help you in doing so.

If the contract does not allow termination, or if the state or federal laws in a particular region do not allow doing so, you may attempt to negotiate with the other party to end the contract. You can complete the agreement when all the parties have a mutual understanding, even if such a clause is not mentioned in the contract itself.

Valid Reason For Termination

If you want to terminate a contract on valid grounds like fraud, coercion, or error, you will have to give written notification to other parties in advance. Once the notice is given, there should be no big challenge if all the parties mutually agree to terminate the contract.

On the other hand, if one or more parties are against terminating the contract, you might have to enter negotiations with them. If still, the parties are not able to reach a mutual agreement, you might have to file a civil suit, and the local court will decide if the contract can be terminated or not.

After-Effects Of Rescission Of A Contract

Based on the conditions on which a contract has been terminated, there might be several after-effects. When you complete the contract, you relieve yourself and the other involved parties from all the deal's obligations.

However, in some cases, there might be several obligations that might make you pay monetary compensation to the other parties if they face any loss due to the termination of the contract. However, that can also be negotiated with the parties.

Apart from that, once the contract is rescinded, all the parties are free from performing the outstanding obligations, as the deal is broken once for all. Also, all the benefits that you or the other parties might be receiving will be null and void once the contract is terminated.