Final answer:
Mutual rescission is when all parties agree to cancel a contract, relieving themselves of obligations, with any payments made being refunded in full.
Step-by-step explanation:
When all parties mutually agree to cancel a contract, this is referred to as a mutual rescission or mutual agreement to rescind. This legal action occurs when both parties acknowledge that they wish to terminate the contract and relieve themselves of their obligations. In the example provided, if the owner cannot deliver possession of the residence on the agreed date due to unforeseen circumstances, and either the owner or the resident opts to cancel the contract with written notice, it is an instance of mutual rescission. In this case, any sums paid under the agreement would be refunded in full, and neither party would have further liability to the other.