Difference Between Contract Termination vs Rescission vs Repudiation


Posted on October 29, 2020 | ⌚ 2 min read



Contracts are normally complete when its parties have performed its terms. However, in some cases, contracts can come to an end in other ways. There are many ways to end a contract without being completed. Common ways to terminate a contract are rescission and repudiation. It is important to know the difference in the reasons and effects of a contract repudiation and rescission.

Rescission

Rescission is a remedy which courts awards a contractual party who's consent, in entering a contract, (which is a fundamental part of entering into contract) has been tainted or invalidated in some way. Invalidation of a party's consent include, but not limited to, mistake, duress, misrepresentation etc. The contract can be rescinded, at the option of the affected party.

The effect of rescission is:

  • reversing of the work done by the parties,
  • restoring status quo ante, i.e. the parties are put back at the position they would have been as if the contract has never existed, and
  • the contract is treated as to be non-existing.

Rescission can also take place by mutual agreement of the parties. However, rescission is not a remedy for a breach of contract.

Repudiation

Repudiation, anticipatory repudiation or anticipatory breach is a declaration made by a contractual party, verbal or by conduct, that they are not willing, or unable to, perform their obligations under the contract.

If one party to a contract anticipatorily repudiates it, the other party is entitled to “accept” this repudiation and terminate the contract. Repudiation stop future performance of contract obligations. However, unlike rescission, rights already given to the parties remain valid.

The content of this commentary is not legal advice. You should always consult a suitably qualified professional regarding any particular legal issue. This blog and all its articles (including this article) shall not be construed in an way as legal or professional advise.


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