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To cancel a contract because of misrepresentation, fraud, or illegal procedure.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


To cancel a contract and declare it invalid from its beginning. When a contract is rescinded, both parties are restored to the status quo before the contract was entered (as much as possible). Rescission may occur by mutual agreement, or when one of the parties misrepresented himself/herself before the contract was signed.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


To withdraw or undo.The act itself is called rescission. If a party has a right of rescission, the party may rescind a transaction.Important rescission rights include the following:

• Under the Truth-in-Lending Act, consumers may rescind a loan transaction if the lender failed to provide all required disclosures.

• Certain state laws give homeowners the right to rescind sales contracts for properties in danger of foreclosure.

• Most states still allow insurance companies to rescind policies if there was a fraud in the representations made to secure the policy.

• Acontract may be rescinded if there was fraud in the inducement, meaning a fraud with the underlying transaction and not with the nature of the contract or document signed.

• Under the Truth-in-Lending Act, consumers refinancing their principal residence or taking out a home equity line of credit may, with certain exceptions, rescind the loan within 3 business days and not owe any interest or fees.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
It's really about money and revenues." The NAR, which must be aware of the lurking danger of millions of rescindable contracts, persists in mandating subagency because that is the only way it can hang onto its mainstay--the MLSs.
Even if currently effective, albeit in a weakened form, the regulations are still easily rescindable or further alterable.
The answer might be to sell the asset as described above, but make sure that the contract for sale is rescindable. This gives you the added flexibility of not paying the tax if the commercial sale does not go ahead.
It is not rescindable at the free and arbitrary will of the contracting parties and the complacent acceptance of legislators, seduced by legal positivism.
Assuming the rescission is based on a valid disclosure violation and the loan is, in fact, truly rescindable, the bankruptcy court may, and frequently has, forced the creditor to return all interest and fees already collected (including those paid to third parties) or to credit that amount against the rescinded loan's principal balance due.