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What is a rescission of a contract?

On Behalf of | Jun 16, 2021 | Blog |

Most Minnesota businesses experience contract disputes from time to time. Sometimes the issue is a contract technicality, which typically is termed a minor breach, while others can be significant breaches of the agreement. Remedies are generally limited to three basic types of settlement, with those being compensatory damages, general damages, or even a contract rescission. Sometimes the problem is such that rescission is actually the only form of remedy that will work effectively.

What is a rescission?

A rescission is a nullification of all or a part of a previous written operating agreement. Contracts by rule must include some type of consideration for each party, and many times they also spell out in specific language what duties and responsibilities each party has to the others. Lack of consideration or a breach of stated terms can result in contract disputes that render a contract unenforceable in some cases, which means the terms are no longer binding for any particular party as the court applies the law. This sets the stage for rewriting the contract, discontinuing the business relationship, or releasing a party from certain responsibilities.

Rescission mediation

One of the best ways to avoid a total rescission is using mediation as an alternative dispute resolution tool for contract disputes. Regardless of the magnitude of the breach, mediation is an informal setting where the interests and complaints of each party can be discussed in a private format, often resulting in a legal and binding agreement that addresses all grey areas of responsibility and duty to other contracting agents.

It is vital for all Minnesota business operators to have an experienced business lawyer when facing contract disputes, and especially when rescission is the requested remedy. All breaches must be proven by the plaintiff, and courts are often reluctant to void a contract that is otherwise enforceable.