n.
The act of rescinding.
[Latin rescissiō, rescissiōn-, from rescissus, past participle of rescindere, to rescind. See rescind.]
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rescission
American Heritage Dictionary:
re·scis·sion |
n.
The act of rescinding.
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Barron's Business Dictionary:
rescission |
Cancellation of a contract and the return of the parties to the positions they would have occupied if the contract had not been made. Grounds for rescissions may include original invalidity of the agreement, fraud , failure of consideration , or material BREACH or DEFAULT . Rescission may be brought about by the mutual consent of the parties, by the conduct of the parties or by a decree by a court of equity.
| Rescind, Reschedule, Resale Proceeds | |
| Research, Research Department, Research Intensive |
Barron's Real Estate Dictionary:
rescission |
The act of cancelling or terminating a contract.
Rescission is allowed when the contract was induced by fraud, duress, misrepresentation, or mistake.
regulation z allows one to rescind certain credit transactions within 3 business days (not applicable to first mortgages on a home); purchasers of certain land that must be registered by the department of housing and urban development (hud) may rescind within 3 business days.
See rescind.
Example: Rescission was allowed by the court for a contract that Abel was induced to enter on the threat of death.
Rescission is allowed when the contract was induced by fraud, duress, misrepresentation, or mistake.
regulation z allows one to rescind certain credit transactions within 3 business days (not applicable to first mortgages on a home); purchasers of certain land that must be registered by the department of housing and urban development (hud) may rescind within 3 business days.
See rescind.
Example: Rescission was allowed by the court for a contract that Abel was induced to enter on the threat of death.
| Rescind, Resale Proceeds | |
| Reservation Price, Reserve Fund |
Roget's Thesaurus:
rescission |
noun
- The act of reversing or annulling: recall, repeal, reversal, revocation. See continue/stop/pause, law.
West's Encyclopedia of American Law:
Rescission |
This entry contains information applicable to United States law only.
The cancellation of a prison inmate's tentative parole date. The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed.
By Agreement
Mutual rescission, or rescission by agreement, is a discharge of both parties from the obligations of a contract by a new agreement made after the execution of the original contract but prior to its performance. Rescission by mutual assent is separate from the right of one of the parties to rescind or cancel the contract for cause, or pursuant to a provision in the contract.
The parties to an executory or incomplete contract can rescind it at any time by mutual agreement, even if the contract itself contains a contrary provision. A rescission by mutual assent can properly include a promise by either or both parties to make restitution as part of the contract of rescission.
The right to rescind is limited to the parties to the contract or those legally authorized to act for them. As with other contracts, the parties to the rescission agreement must be mentally competent.
Form
The rescission agreement can be either written or oral. An implied agreement is also effective, provided the assent of the parties can be shown by their acts and the surrounding circumstances. An express rescission of a contract as a whole is adequate and effective, without specifically designating each and every clause to be rescinded.
Unless a statute provides otherwise, an oral rescission agreement is valid, even though the contract being rescinded contains a provision that it can be altered only in writing.
Assent
All the parties to the contract must assent to its rescission because mutual rescission involves the formation of a new contract. A meeting of minds can be reached by an offer to rescind and an acceptance by the other party. One party to a contract cannot rescind it simply by giving notice to the other party that he or she intends to do so.
Although a breach of contract by one party is not an offer to rescind, the other party can treat the repudiation as an offer to rescind that he or she can accept, leading to rescission of the contract by mutual assent. Rescission must be clearly expressed, however, and the conduct of the parties must be inconsistent with the existence of the contract. The fact that some of the materials that form part of the subject matter of the contract have been returned is not conclusive as to whether rescission has occurred.
Consideration
An agreement to rescind a prior contract must be based on a sufficient consideration, an inducement. When a contract remains executory on both sides, an agreement to rescind by one side is sufficient consideration for the agreement to cancel on the other, and vice versa. If the contract has been executed on one side, an agreement to rescind that is made without any new consideration is void — of no legal force or binding effect.
Operation and Effect
The mutual rights of the parties are controlled by the terms of their rescission agreement. The parties are generally restored to their original rights in regard to the subject matter. They no longer have any rights or obligations under the rescinded contract, and no claim or action for subsequent breach can be maintained.
Whether rights or obligations already accrued are abandoned when the contract is rescinded in the course of performance depends on the intention of the parties, as deduced from all attending facts and circumstances, and on whether the parties have reserved such rights. Recovery can be allowed, however, for partial performance.
Wrong or Default of Adverse Party
No arbitrary right exists to rescind a contract. An executory contract that is voidable can be rescinded on the grounds of fraud, mistake, or incapacity.
A contract, whether oral or written, can be rescinded on the ground of fraud. The right to rescind for fraud is not barred because the defrauded party has failed to perform. Generally, false statements of value, or the failure to perform a promise to do something in the future without fraudulent intent, will not provide a basis for rescission for fraud or misrepresentation. A party proves sufficient grounds for rescission by showing that he or she was induced to part with some legal right or to assume some legal liability that he or she otherwise would not have done but for the fraudulent representations.
On discovering the fraud, the victimized party can affirm the contract and sue for damages. He or she might instead repudiate the contract, tender back what he or she has received, and recover what he or she has parted with, or its value; the adoption of one remedy, however, excludes the other.
A contract obtained by duress can be rescinded, and in such a case, the same rules apply as in the case of fraud. A contract cannot be avoided because of duress or coercion, however, unless the duress was sufficient to overcome completely the will of the party who is seeking to avoid the contract.
A mutual mistake concerning a material fact entitles the party affected by the mistake to rescind the contract, unless the contract has already been completed and rescission would be an injustice to the other party. Rescission can also be allowed even for a unilateral, or one-sided, mistake in order to prevent an unjust enrichment of the other party. On rescission, the aggrieved party can recover the money he or she has paid or the property he or she has delivered under the contract.
A contract made by a person of unsound mind can be rescinded when the parties can be restored to the status quo. This rule applies even if the opposite party was unaware of the mental condition, and the contract was fair, reasonable, and made in good faith for adequate consideration. When one party knows of the other's incapacity, the contract can be rescinded on the ground of fraud. When both parties are sane and the contract is valid, subsequent insanity of one of the parties is not a ground for rescission, unless it affects the substance or purpose of the contract, as in the case of a personal services contract.
As a general rule, a contract cannot be rescinded because one of the parties was intoxicated at the time it was made. If, however, unfair advantage was taken of a person's intoxicated condition, or if the intoxication was induced by the party seeking to take advantage of the contract, the contract can be set aside on the ground of fraud. Similarly, habitual drunkenness that impairs a party's mental abilities can constitute a ground for rescission.
Inadequate Consideration
Mere inadequacy of consideration is not a sufficient reason to justify rescission. When the consideration is so inadequate that it shocks the conscience of the court or is so closely connected with suspicious circumstances or misrepresentations as to provide substantial evidence of fraud, it can furnish a basis for relief.
Nonperformance or Breach
One party to a contract can rescind it because of substantial nonperformance or breach by the other party. The party who knowingly and willfully fails to perform cannot complain that the other party to the contract has injured him or her by terminating the contract. The right to rescind does not arise from every breach but is permitted only when the breach is so substantial and fundamental that it defeats the objective of the parties in making the agreement. The breach must pertain to the essence of the contract. The act must be an unqualified refusal by the other party to perform and should amount to a decision not to be bound by the contract in the future. A party to a contract who is in default cannot, however, rescind because of a breach by the other party.
When time is of the essence in a contract, failure to perform within the time stipulated is a ground for rescission. Otherwise a delay in the time of performance is not considered a material breach justifying rescission. When performance is intended within a reasonable time, one party cannot suddenly and without reasonable notice terminate the contract while the other party is attempting in good faith to perform it.
An unconditional notice by one party that he does not intend to perform a contract is a ground for rescission by the other party. In order to justify rescission, the refusal must be absolute and unconditional.
When one party to a contract abandons it and refuses further performance, or her conduct shows that she is repudiating the contract, the other party is entitled to rescission. A disagreement over the terms of the contract and a subsequent refusal to perform in a particular manner by one of the parties do not constitute an abandonment of the contract justifying rescission.
Time
A right to rescind must be exercised promptly or within a reasonable time after the discovery of the facts that authorize the right. A reasonable time is defined by the circumstances of the particular case. The rule that rescission must be prompt does not operate where an excuse or justification for a delay is shown.
Investopedia Financial Dictionary:
Rescission |
The right of an individual involved in a contract to return to a state identical to that before they entered into the agreement, due to courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a material error in the contract, among other reasons.
Investopedia Says:
This is an important concept in the business world, as contracts are commonplace. Should a contract not be legally binding, most often courts will try to return the non-liable parties affected to the state they were in before the contract was entered into.
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Word Tutor:
rescission |
IN BRIEF: The act of canceling; repeal.
The rescission of the rule was requested by the safety committee.
LearnThatWord.com is a free vocabulary and spelling program where you only pay for results!
Random House Word Menu:
categories related to 'rescission' |
- Decisions, Judgments, and Conditions - rescission: cancellation, annulment, or vacating of law, judgment, or contract, as by restoration to opposite party of what one has received from that party
Wikipedia on Answers.com:
Rescission |
"Overturning" redirects here. For other uses, see Turning over (disambiguation).
In contract law, rescission has been defined as the unmaking of a contract between parties.[1] Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract (the status quo ante).
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Contents
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In court
Rescission is an equitable remedy and is discretionary. A court may decline to rescind a contract if one party has affirmed the contract by his action (see Long v Lloyd [1958] 1 WLR 753) or a third party has acquired some rights or there has been substantial performance in implementing the contract. Furthermore, because rescission is supposed to be imposed mutually upon both sides to a contract, the party seeking rescission normally must offer to give back all benefits he or she has received under the contract (an "offer of tender").
Virginia uses the term "cancellation" for equitable rescission. Furthermore, a minority of common law jurisdictions, like South Africa, use the term "rescission" for what other jurisdictions call "reversing", "overturning" or "overruling" a court judgment. In this sense, the term means to be set aside or made void, on application to the court that granted the judgment or a higher court. Applications to rescind a judgment are usually made on the basis of error or for good cause.
Most common law jurisdictions avoid all this confusion by holding that one rescinds a contract and cancels a deed (i.e. of real property), and treat rescission as a contractual remedy rather than a type of procedural remedy against a court judgment.
By private companies
In finance, law, and insurance, rescission is the termination of a contract from the beginning (as if it never existed), rendering it void ab initio. In 2008, one judge ruled that borrowers who refinanced into an adjustable-rate mortgage could force a bank to rescind mortgage loans if it acted similarly inappropriately.[2] Rescission is typically viewed as "an extreme remedy" which is "rarely granted".[3]
Insurance
Insurers have the right to rescind an insurance policy due to concealment, material misrepresentation, or material breach of warranty. Generally, to rescind, an insurer will send a notice to the insured and tender a check in the amount of the premium paid for the relevant policy period.
In certain states such as Oklahoma the insurer is additionally required to prove an "intent to deceive" in the misrepresentation;[4] this fraud or intent requirement was extended federally for health insurance contracts effective September 23, 2010[5] by Section 2712 of the Patient Protection and Affordable Care Act. In the long-run the change may have little effect in practice given that the bill eventually will not allow underwriting based on preexisting conditions.[6]
In health insurance and specifically the individual and small group insurance markets, rescissions have generally followed the diagnosis of an expensive-to-treat illness in the patient (policyholder), typically because of withheld information about a pre-existing medical condition.[7] This practice was popularized during the 2009 US healthcare debate, known colloquially as "cancel coverage when you get sick". The practice of health insurance rescission was partially limited starting September 23, 2010,[8] following the adoption of the Patient Protection and Affordable Care Act in 2010. A House committee report[9] found that WellPoint Inc., UnitedHealth Group and Assurant rescinded policies for more than 20,000 people over a five-year period;[7] the House report also found highlighted 13 particular cases.[9]
In 2010, it was revealed that WellPoint specifically targeted women with breast cancer for aggressive investigation with the intent to cancel (rescind) their policies.[10] The disclosures followed the discovery that Assurant Health similarly targeted all recently-diagnosed HIV-positive (AIDS) policyholders for rescission.[11] U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius sent a letter to WellPoint urging the insurer to immediately end their practice of dropping health insurance coverage for the women.[5]
The software technology used by Wellpoint as well as other major American health insurance companies[12] is provided by MIB Group, Inc.. The software automatically triggered a fraud investigation on every policyholder recently diagnosed with breast cancer and searched for conditions not disclosed in the application.[10][13] The MIB Group provides a "Follow-up Service" which allows for a "second chance" to underwrite based on additional, discovered information during the contestable period.[14] The service is maintained for two years after initial underwriting and may include, among other information credit history, medical conditions, driving records, criminal activity, drug use, participation in hazardous sports, and personal or family genetic history.[15] Consumers can request a copy of the data in their report from MIB Group.[16]
By government
In American government, rescission authority rests with the President. This authority was granted in the Congressional Budget and Impoundment Control Act of 1974. The President can force Congress to vote on rescinding (or permanently withholding) already appropriated funds.[17] The average amount that Presidents requested between 1974 and 2005 was about $15 billion.[18]
In parliamentary procedure, the motion to rescind, repeal or annul is used to cancel or countermand a motion previously adopted.
Notes
- ^ Abdallah, Inc. v. Martin, 242 Minn. 416, 420, 65 N.W.2d 641, 644 (1954).
- ^ G. Keating (July 7, 2008). "Mortgage Rescission Could Be Class Action Nightmare for U.S. Banks". Insurance Journal. http://www.insurancejournal.com/news/national/2008/07/07/91590.htm.
- ^ Ferrara D. (2007). Directors and Officers: Side A Only Coverage Working Through the Hype. FDCC QUARTERLY Summer 2007.
- ^ Ables A. (2007). MISREPRESENTATION AND RESCISSION OF INSURANCE CONTRACTS. FORC Journal.
- ^ a b HHS Press Office (April 23, 2010). "HHS Secretary Kathleen Sebelius Urges WellPoint to Immediately Stop Dropping Coverage for Women with Breast Cancer". U.S. Department of Health and Human Services. http://www.hhs.gov/news/press/2010pres/04/20100423a.html.
- ^ Harrington SE. The Health Insurance Reform Debate. Journal of Risk and Insurance.
- ^ a b L. Girion (June 17, 2009). "Blue Cross praised employees who dropped sick policyholders, lawmaker says". Los Angeles Times. http://articles.latimes.com/2009/jun/17/business/fi-rescind17.
- ^ HealthCare.Gov Website Timeline "What's Changing and When"
- ^ a b Committee on Energy and Commerce. (2009). Supplemental Information Regarding the Individual Health Insurance Market. U.S. House of Representatives. See also Case studies: examples of health insurance companies rescinding individual policies.
- ^ a b Murray Waas (April 22, 2010). "Exclusive: WellPoint Routinely Targets Breast Cancer Patients". Reuters. http://www.reuters.com/article/idUSTRE63L2LS20100422.
- ^ Emily Barry (April 9, 2010). "Health Plan Loses Court Battle over Rescission; Records show that Assurant Health routinely targeted HIV-positive members for fraud review". American Medical Association News. http://www.ama-assn.org/amednews/2010/04/05/bisg0409.htm.
- ^ "Nation’s Largest Insurance Reporting Agency Agrees To Expand Consumer Rights" FTC.
- ^ WellPoint Inc. (April 22, 2010). "PR Newswire: WellPoint's Reuters Response". PR Newswire. http://www.prnewswire.com/news-releases/wellpoints-reuters-response-91845649.html.
- ^ MIB Group Inc. "Follow Up Service"
- ^ FTC Press Office (June 21, 1995). "Nation's Largest Insurance Reporting Agency Agrees To Expand Consumer Rights". Federal Trade Commission. http://www.ftc.gov/opa/1995/06/mib.shtm.
- ^ "MIB Group Inc. Catches Consumers Because it Can". AnnualMedicalReport.com. January 7, 2010. http://www.annualmedicalreport.com/mib-catches-consumers-because-it-can/.
- ^ rules.house.govrules.house.gov
- ^ Pete Du Pont (April 26, 2006). "Dog the Swag; How Republicans can break the spending habit.". Wall Street Journal. http://www.opinionjournal.com/columnists/pdupont/?id=110008285. Retrieved 2009-06-18.
References
- O'Sullivan, Dominic; Steven Elliot, Rafal Zakrzewski (February 2008). The Law of Rescission. Oxford University Press. ISBN 0-1992-5011-1.
External links
 |
Look up rescission in Wiktionary, the free dictionary. |
- Health Care Rescission Legislative Hearing, video playlist of testimony by legislators, health care industry officials, as well as people who were denied health care due to up to 2000 points of criteria which could trigger a rescission investigation and deny a person access to essential services emergency health care during that investigation period.
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
Translations:
Rescission |
Dansk (Danish)
n. - tilbagekaldelse, ophævelse, annullering (jur.)
Français (French)
n. - abrogation, annulation, résiliation, cassation, retrait
Deutsch (German)
n. - Annullierung
Ελληνική (Greek)
n. - ακύρωση, κατάργηση (νόμου)
Português (Portuguese)
n. - rescisão (f)
Русский (Russian)
аннулирование, отмена
Español (Spanish)
n. - rescisión, abrogación
Svenska (Swedish)
n. - upphävande, återkallande
中文（简体）(Chinese (Simplified))
废止, 使无效, 取消
中文（繁體）(Chinese (Traditional))
n. - 廢止, 使無效, 取消
한국어 (Korean)
n. - 무효로 함, 폐지 , 계약 해제
日本語 (Japanese)
n. - 無効にすること, 廃止, 解除
العربيه (Arabic)
(الاسم) إلغاء, إبطال, نسخ
עברית (Hebrew)
n. - ביטול, הסרה
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| rescissory |
| Discharge (business term) |
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 | American Heritage Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved. Read more |
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| Barron's Business Dictionary. Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved. Read more |
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| Barron's Real Estate Dictionary. Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved. Read more |
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| West's Encyclopedia of American Law. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved. Read more |
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| Investopedia Financial Dictionary. Copyright ©2010, Investopedia.com - Owned and Operated by Investopedia US, A Division of ValueClick, Inc. All rights reserved. Read more |
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