Legal Definitions - agreement of rescission

Agreement of Rescission

An agreement of rescission is a new contract formed by parties who previously entered into another contract. Its specific purpose is to mutually cancel or undo that original contract. Essentially, it's a formal understanding where both sides agree to terminate their existing legal obligations to each other under a prior agreement, effectively returning them, as much as possible, to the position they were in before the original contract was ever made.

• Example 1: Early Lease Termination

  Imagine a tenant signs a 12-month apartment lease. Two months into the lease, the tenant receives an unexpected job offer in another city and needs to move. Instead of the tenant breaking the lease and potentially facing penalties, the tenant and landlord discuss the situation. They both agree that it's mutually beneficial to end the lease early, perhaps because the landlord has a new prospective tenant ready to move in immediately. They sign a new document outlining their mutual agreement to terminate the original 12-month lease ahead of schedule.

  This new document is an agreement of rescission. It legally cancels the original lease contract, releasing both the tenant from future rent payments and the landlord from providing the property for the remaining months, effectively undoing the original lease agreement by mutual consent.

• Example 2: Canceling a Business Service Contract

  Consider a small business that hires a marketing agency for a six-month social media campaign. After three months, the business decides to pivot its strategy and bring all marketing in-house. Simultaneously, the marketing agency secures a much larger client that requires their full attention. Recognizing their changed circumstances, both the business owner and the marketing agency agree that it would be best to end their current contract early. They draft and sign a document stating their mutual consent to terminate the remaining three months of the marketing service agreement.

  This signed document constitutes an agreement of rescission. It legally voids the original marketing contract, releasing the business from paying for the remaining months and the agency from providing further services, thereby mutually canceling their prior contractual obligations.