Mutual rescission means what?

• A. Both parties agree to cancel the contract.
• B. One party breaches and is sued.
• C. The contract is terminated by impossibility.
• D. The contract is void.

Answer: (A)

Mutual rescission is when both parties consent to cancel the contract and release each other from any further obligations, effectively restoring them to the positions they were in before the agreement. Because it’s by mutual agreement, the contract ends without a breach or court action, and any consideration exchanged (like earnest money) is typically returned. This differs from a unilateral breach (where one side is sued for not performing), termination due to impossibility (where performance can’t be done), or a contract that’s void from the start.