Question

Al contracted to sell his house to Bev. Subsequently, they both changed their minds and agreed to cancel the contract. The contract between Al and Bev is discharged by_________.

1) full performance
2) rescission
3) accord and satisfaction
4) novation

Answer 1

Al and Bev's mutual agreement to cancel their house sale contract is known as rescission, which discharges the contract as if it never existed, releasing both parties from further obligations.

Step-by-step explanation:

When Al and Bev mutually agree to cancel their contract for the sale of a house, this is known as rescission. Rescission is the termination of a contract by mutual agreement of the parties. It discharges the contract and does so as though the contract never existed, which means neither party has any further obligation to the other. This is to be distinguished from full performance, accord and satisfaction, and novation, all of which have different legal implications and processes for discharging a contract.