DEFINITION of 'Rescission'

The right of an individual involved in a contract to return to a state identical to that before they entered into the agreement, due to courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a material error in the contract, among other reasons.

BREAKING DOWN 'Rescission'

This is an important concept in the business world, as contracts are commonplace. Should a contract not be legally binding, most often courts will try to return the non-liable parties affected to the state they were in before the contract was entered into.

  1. Ombudsman

    An official who investigates complaints (usually lodged by private ...
  2. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  3. Right Of Rescission

    A right under federal law set forth by the Truth in Lending Act ...
  4. Contract Holder

    An individual or organization who owns the rights to a debt or ...
  5. Default

    1. The failure to promptly pay interest or principal when due. ...
  6. Obligation

    The legal responsibility to meet the terms of a contract. If ...
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