Also known as: rescind the contract · rescinded the contract · rescinds the contract · rescission of contract · contract rescission · rescission · rescinding contract
Written by attorneys — see sources below.
An agreement under which each party agrees to discharge all of the other party's remaining duties of performance under an existing contract. The agreement discharges those duties and may require restitution for performance already rendered depending on the parties' intent.
Riley Rivera contracts to purchase a parcel from Ralph Richardson. A recorded lien remains on the property at closing. Riley refuses to proceed and rescinds the contract because the title defect prevents delivery of marketable title.
Rosalind Reed and Raymond Ramos enter a written consulting agreement. They later agree orally to cancel all remaining obligations. The oral agreement discharges the unperformed duties even though the original contract fell within the Statute of Frauds.
Radiant Technologies and Royal Crest Hotels sign a multi-year supply contract. They later execute a written rescission agreement stating that each releases the other from all remaining delivery and payment duties.
Redwood Bank and Regal Apparel terminate their equipment lease by agreement. The parties disagree on whether Regal must return prepaid rent. The court interprets the rescission agreement to require restitution of the unearned portion.
Rachel Ramirez contracts to buy a home from Ravi Reddy. After signing she learns the house carries a widely known reputation for paranormal activity that the seller never mentioned. Rachel rescinds the contract and recovers her deposit.
Stambovsky, a resident of New York City, entered into a contract to purchase a house located in the Village of Nyack from defendant Ackley. Shortly after contracting, Stambovsky discovered to his horror that the house was widely reputed to be possessed by poltergeists. These apparitions had reportedly been seen by Ackley and members of her family on numerous occasions over the preceding nine years. Ackley had actively publicized the presence of these spirits. She reported their existence in a national publication, Readers’ Digest, and in the local press in 1977 and 1982, respectively. As a result of these efforts, the house gained a reputation in the community as haunted. In 1989, the property was featured in a five-home walking tour of Nyack and was described in a November 27 newspaper article as a riverfront Victorian with a ghost. Upon learning of this reputation, Stambovsky promptly commenced an action in the Supreme Court, New York County, seeking rescission of the contract of sale and recovery of his down payment. The Supreme Court dismissed the complaint pursuant to CPLR 3211(a)(7) on April 9, 1990. Stambovsky then appealed to the Appellate Division.
View caseA shareholder sells shares to a corporate officer who possesses material inside information about an impending discovery. Upon learning the facts the seller rescinds the transaction and demands return of the shares.
In May 1926, defendants Agassiz and MacNaughton purchased seven hundred shares of Cliff Mining Company stock on the Boston stock exchange through brokers. Agassiz served as president and director of the Cliff Mining Company, while MacNaughton acted as a director and general manager. The defendants possessed knowledge of a theory developed in writing by an experienced geologist in March 1926 regarding the possible existence of copper deposits in the region where the company's property was located. This theory had not been tested at the time, and the defendants agreed to keep it confidential while securing options on adjacent lands through another company they directed. Exploration operations on the Cliff Mining Company property, begun in 1925, concluded unsuccessfully in May 1926. Upon reading an article in a newspaper on May 15, 1926, about the closing of exploratory operations, the plaintiff sold his shares through brokers. The plaintiff and defendants had no direct communication regarding the transaction, and neither knew the identity of the other party. The plaintiff would not have sold had he known of the geologist's theory. The trial judge made findings of fact including that the defendants were not guilty of fraud, committed no breach of duty to the company, and that the company suffered no harm from the nondisclosure or the stock purchases. The judge ruled that no fiduciary relation required disclosure in these circumstances and dismissed the bill. The plaintiff appealed, seeking relief by way of accounting, rescission, or redelivery of shares.
View caseYes. All unperformed duties under an enforceable contract may be discharged by an oral agreement of rescission even if the original contract was within the Statute of Frauds.
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An agreement of rescission discharges all remaining duties of performance of both parties. Whether restitution is also required depends on how the parties interpret their rescission agreement.
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A buyer may rescind when the seller cannot convey marketable title at closing because of recorded encumbrances, gaps in the chain of title, or adverse claims.
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No. Expressions of rescission do not renounce or discharge claims for damages arising from an antecedent breach.
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…to be traversed and the salesman recommended the type of vehicle purchased. The car could not operate on the roads described and rescission was sought. International Harvester contended that the only warranty extended was contained in the purchase order. It was substantially similar to the one in the present case, providing…