Legal Definitions - rescissio

Rescissio refers to the act of canceling or undoing a legal agreement or action, effectively making it null and void from its beginning. It's like pressing an "undo" button on a legal commitment, restoring the parties involved to their original positions as if the agreement or act never took place. The more common English term for this concept is rescission.

Here are some examples to illustrate this concept:

• Example 1: Car Purchase with Undisclosed Damage

  Imagine a situation where a customer purchases a used car from a dealership. The salesperson explicitly states that the car has never been in an accident and is in perfect condition. A week later, the customer's mechanic discovers extensive, previously repaired frame damage that was intentionally concealed by the dealership, indicating a major prior collision.

  In this scenario, the customer could seek rescissio of the car purchase contract. If successful, the contract would be canceled, the customer would return the car, and the dealership would refund the full purchase price. This action effectively unwinds the transaction, putting both parties back to their original positions as if the fraudulent sale never occurred.

• Example 2: Real Estate Contract Due to Hidden Defect

  Consider a couple who buys a new home. During the sale, the seller signs a disclosure form stating there are no known issues with the property's foundation. After moving in, the couple discovers severe, pre-existing structural damage to the foundation that the seller demonstrably knew about and deliberately hid from them.

  The buyers could pursue rescissio of the home purchase agreement. If granted by a court, the sale would be undone: ownership of the property would revert to the seller, and the buyers would receive their entire purchase price back. This action effectively cancels the transaction, treating it as if the sale never happened due to the seller's misrepresentation.

• Example 3: Investment Agreement Based on False Information

  An individual invests a substantial amount of money in a new startup company after reviewing an investment prospectus. This document contains materially false financial projections and misrepresentations about the company's existing assets and market potential.

  The investor could seek rescissio of the investment agreement. If successful, the agreement would be voided. The company would be legally required to return the investor's money, and the investor would relinquish any shares or stake they received, thereby unwinding the investment as if it had never been made.