1.Declaration or clearly communicated intention by a party to a voidable contract that it is exercising its right to terminate (rescind) the contract. It is an irrevocable step that frees the other party as well from its contractual obligations, as if the contract never existed. Rescission may be on mutual consent, by an act of law, or by either party for reasonable cause such as a material misrepresentation.
2.Disaffirmation or unmaking (called setting aside) of a contract by a court in the interest of fairness and justice. However, the right of rescission may not be exercised where (1) it is not possible to restore both parties to their original (pre-contract) positions, and/or (2) such step would upset the rights acquired by a third-party under the contract.