Rescind Contract

Home » Agreement Articles » Rescind Contract

Rescind Contract

A Brief Introduction About the Rescind Contract

A rescission contract signifies the mutual intent of the contracting parties to rescind or cancel a certain contract or agreement they entered into. Rescinding a contract means that the contract is treated as though it never came into existence or that it is void ab initio.

What Does Rescind Mean?

Rescission is a remedy in contract law that allows circumstances to be restored to a previous state or to establish status quo ante. Its purpose is to disaffirm the contract by dissolving it ab initio, or as though it had never come into existence. It must be noted that rescission is unlike suits for breach or specific performance as those suits affirm the contract while rescission disaffirms it. In most cases, rescission is sought when it is discovered that there was no meeting of the minds when forming the contract, rendering it void of contractual intent.

Who Takes the Rescind Contract? – People Involved

You would need to enter into a rescission contract if:

  1. You are a party to the contract you wish to rescind and have the consent of all other parties in this regard.

There are certain circumstances under which rescission is not considered a suitable remedy. The contracting parties are the same as those in the contract that is to be rescinded.

Purpose of the Rescind Contract – Why Do You Need It?

The purpose of this contract is to:

  1. Express the mutual consent of all contracting parties to rescind and cancel the existing contract to restore the status quo ante. By this, the parties are absolved of all obligations that the contract to be rescinded rendered upon them.

Contents of the Rescind Contract – Inclusions

A well-drafted rescission contract is detailed and includes the following terms:

  1. Effective Date
  2. Parties to Contract
  3. Rescission
  4. Mutual Release
  5. Closing
  6. Indemnification
  7. Counterparts
  8. Severability
  9. Governing Jurisdiction
  10. State-specific laws

How to Draft the Rescind Contract?

The procedure to draft a rescission contract is as follows:

  1. Include the date on which the agreement will come into effect, i.e., the effective date.
  2. Identify the contracting parties, including their names and addresses.
  3. Establish the relationship between the parties by referring to the contract to be rescinded.
  4. Establish the mutual intent of the parties to rescind and cancel the contract in question.
  5. Include all the steps that are necessary to be taken to restore the status quo ante.
  6. Include essential terms, such as mutual release and closing.
  7. Include any warranties, indemnities, or other covenants that may be required.
  8. State the name of the jurisdiction that will govern the document and its terms.
  9. Allow the parties to review the document and explain any terms that they might not be fully aware of. Make any changes as per the negotiations of the parties.
  10. Have the parties expressed their consent by signing the document?

Ensure that the terms are simple, clear, and void of ambiguity. The parties must be allowed to review the document and ask questions about any terms or conditions that they may not fully be aware of.

Negotiation Strategy

When framing the terms of the Rescind Contract, it is important to recognize that the parties should be given adequate opportunities to clarify and clear any confusion about any terms or conditions. The terms must not be framed such that they nourish one party at the expense of another. This will allow the parties to have a sound understanding of the terms and conditions of the contract and reduce the chances of a dispute caused by disagreement.

Benefits & Drawbacks of the Rescind Contract


  1. It is an expression of the mutual consent and volition of the parties involved.
  2. It eliminates the possibility of any disputes as there is written proof of the consent of the parties and therefore prevents the backtracking of consent.
  3. It makes the legal resolution of disputes more plausible.


  1. Legal costs must be borne by the parties.
  2. The process can be time-consuming.

What Happens in Case of Violation?

There is little scope for violation in the case of a rescission agreement as it arises out of the cooperation and mutual willingness of all contracting parties. However, if a dispute still arises, the parties can always approach the courts for relief or settle the dispute using alternative dispute resolution methods such as mediation or arbitration.

A rescission agreement is entered into in the case of mutual rescission, i.e., all parties mutually agree that the contract in question must be rescinded and canceled. Rescission can also be unilateral; however, that precludes the need for a rescission agreement and results in litigation or dispute(1). Rescission aims to restore the parties to the state as they were before entering into the contract, or the status quo ante. A written rescission agreement is not required but is usually used to document the transaction.