Rescinding a contract is a legal remedy recognized in the State of New York, allowing the parties to a contract to cancel or void the contract. In effect, a rescission of a contract restores the parties to their pre-contract positions, as if the contract never existed or the transaction was never consummated.
As with all legal remedies, the ability to rescind a contract depends on a variety of factors, such as the type of contract, the circumstances surrounding the contract, and whether any specific laws or regulations apply to the contract in question. Such circumstances include the following:
- Was there a mutual agreement to rescind the contract? This circumstance is certainly the most straightforward way to rescind a contract, by the parties’ mutual agreement. The parties can prepare a new writing, which shall specifically revoke the prior transaction and provide for whatever new terms are agreed upon, if they wish.
- Was there a valid ground for rescission recognized by law? These legal grounds might include fraud, misrepresentation, duress, mistake, illegality, or a failure of consideration. In this case, the rescission of a contract will likely be determined once a lawsuit is filed and the underlying facts are proven in court. Additionally, there may exist a statutory right of rescission, such as a consumer contract which provides for the cancellation of a contract within a specified period of time.
- Is the request to rescind timely? Courts may consider the timeliness of a party’s request to rescind a contract. If a party fails to act promptly in seeking the rescission, the Court could disallow the same, despite the availability or presence of other foregoing factors.
If a rescission is agreed upon or ordered by a Court, the parties to such agreement or action will likely be obligated to return the benefits, assets, or consideration received under the contract to the other party, as this is part of what it means to restore the parties to their original positions had the contract not occurred.
It’s important to consult with an attorney experienced in contract law in New York if you are considering rescission of a contract or if you believe you have valid grounds for rescission. Oftentimes, the specific circumstances of your case will determine whether rescission is a legal remedy available to you, and these circumstances can dictate what steps need to be taken to achieve it.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.