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rescission

The setting aside of a *voidable contract, which is thereby treated as if it had never existed. Rescission is an irrevocable step and can be effected by any clear indication of intention to be no longer bound by the contract; this intention must be either communicated to the other party or publicly evidenced in some way. Rescission can also be effected by a formal action (a remedy developed by the courts of equity). There are limits on the right of rescission. It cannot be exercised unless restitutio in integrum is possible, i.e. unless it is possible to restore both parties to their original positions, and it cannot be exercised if this would involve upsetting rights acquired by third parties. Thus, a buyer of goods cannot rescind if he cannot return the goods, and a seller of goods cannot rescind if they have been resold to a third party.

The setting aside of a proprietary contract by a minor is normally called repudiation rather than rescission, but there is no distinction in substance. The treating of a contract as discharged by breach (see *breach of contract) is frequently, but misleadingly, called rescission. It does not operate retrospectively and is permissible whether or not restitutio is possible.

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