Legal Definitions - recision

Recision, often used interchangeably with rescission, refers to the act of canceling or undoing a contract, agreement, or transaction. When a contract is rescinded, it is treated as if it never existed, and the parties involved are restored to the positions they were in before they entered into the agreement. This legal remedy is typically sought when there has been fraud, misrepresentation, a significant mistake, or a material breach of contract, making the agreement fundamentally unfair or invalid.

• Example 1: Home Renovation Contract

  A homeowner hires a contractor to build a new deck, based on the contractor's promise to use premium, weather-resistant composite materials. After the project begins, the homeowner discovers the contractor is actually using much cheaper, standard lumber that is prone to rot. The homeowner could seek recision of the contract. If successful, the contract would be canceled, the homeowner would not have to pay for the unfinished work, and the contractor would be obligated to remove any installed inferior materials and restore the area to its original state, effectively unwinding the agreement as if it never happened.

• Example 2: Software License Agreement

  A small business purchases a perpetual license for a specialized accounting software, relying on the vendor's explicit assurance that the software is fully compatible with their existing operating system and hardware. After installation, the business finds that the software consistently crashes and is unusable due to fundamental incompatibility issues that the vendor knew about but failed to disclose. The business could pursue recision of the software license agreement. This would involve returning the software (or deactivating the license) and receiving a full refund of the purchase price, placing both the business and the vendor back in their pre-agreement financial and contractual positions.

• Example 3: Real Estate Purchase

  A buyer signs a contract to purchase a commercial property after the seller provides documents falsely claiming the property is zoned for retail use. Before closing, the buyer discovers through independent research that the property is actually zoned for industrial use only, which significantly impacts its value and the buyer's intended business operations. The buyer could seek recision of the purchase agreement. This would mean the contract is canceled, the buyer gets their earnest money deposit back, and the seller retains ownership of the property, effectively nullifying the sale as if the agreement was never made.