Final answer:
Mutual rescission is the term used when both parties involved in an agency agreement agree to end it early. It is characterized by mutual consent and often involves settling any ongoing duties or obligations.
Step-by-step explanation:
Mutual rescission in an agency agreement refers to the joint decision of both parties, the principal and the agent, to terminate the contractual arrangement before its scheduled expiration. This collaborative termination is typically formalized through a written agreement that outlines the terms and conditions of the mutual rescission. Unlike unilateral rescission, which involves one party terminating the agreement without the consent of the other, mutual rescission requires the explicit agreement of both parties involved.
For the process to be effective, both the principal and the agent must willingly consent to the termination, and any outstanding duties or obligations stemming from the agency relationship need to be resolved satisfactorily. Mutual rescission provides a legal and agreed-upon means for parties to conclude the agency agreement prematurely, allowing them to part ways amicably and in accordance with the terms laid out in the written agreement.