What is meant by "rescission" in contract law?

"Rescission" in contract law refers to the cancellation or annulment of a contract. This legal remedy effectively voids the contract, treating it as if it never existed. Rescission may be sought when there are grounds such as misrepresentation, fraud, duress, undue influence, or a mutual mistake of fact. It serves to restore the parties to their pre-contractual positions, allowing them to return any benefits received under the contract and thus aiming to place them back in the situation they occupied before the agreement was made.

The concept of rescission is vital in contract law because it provides a mechanism for parties to extricate themselves from agreements that are fundamentally flawed or unjust due to various reasons. Understanding this term is crucial for recognizing when a contract may be inoperative and the remedies available to the affected parties.