Rescission of the Contract

If a breach of agreement is material, the offended party may rescind the agreement. Rescission is a unilateral legal act. The effect of rescission is that the contract ceases to bind both parties and the parties no longer have any contractual obligations.All performances already done are usually returned.

Usually there are no formality requirements in respect of the notice of rescission, unless otherwise agreed between the parties or prescribed by law. The notice to rescind must set out the reason for rescinding the contract, i.e. the breach of contract must be clearly identified.

It is advisable to make the notice to rescind always in writing.

A notice to rescind must be made within a reasonable period of time after the offended party has found or ought to have found the other party's breach of contract.

Contracts usually set out conditions for rescission of the contract. The conditions may refer to the requirement of essentiality or to the rescission process. Contracts often require that a prior warning about the rescission must be given.