What does it mean to "rescind" a contract?

To "rescind" a contract means to cancel the contract and restore the parties to their positions prior to entering into the agreement. This legal action is typically taken when there has been a significant issue with the contract, such as misrepresentation, fraud, undue influence, or a mutual mistake. By rescinding the contract, the law seeks to ensure that the parties return to their original state, as if the contract had never existed. This process emphasizes the idea of fairness and equity, ensuring that no party is unfairly bound to a contract that had fundamental issues.

In contrast to modifying the terms or enforcing the existing terms, rescission nullifies the contract completely, which distinguishes it significantly from simply changing the agreement or creating a new one based on original terms.