When unwinding is on the table
Contract rescission treats an agreement as undone, so that each side returns what it received. Courts usually consider it where something went wrong when the deal was formed, such as fraud or a basic mistake shared by both sides. In New York rescission is an equitable remedy, which means the court has discretion, and it is generally unavailable when money damages would adequately make up for the harm. Parties can also agree to rescind a contract together, which is often simpler than asking a court to order it. Some consumer transactions come with a statutory right to cancel within a short window, and that right works differently from the remedy described here.
Delay can close the door
The person seeking rescission is generally expected to act promptly once they learn the facts. Continuing to accept the benefits of the contract, making further payments without objection, or otherwise treating the agreement as still in force can be read as affirming it, which may leave damages as the remaining option. Rescission also usually requires the party seeking it to return, or offer to return, what it received, so it helps to think early about whether that is practical. Keep the contract, the communications and marketing materials that led you to sign, and a record of when you discovered the problem. Talk to counsel before sending a notice of rescission, because its wording and timing can affect your position.
Choosing between rescission and damages
Rescission and damages are usually alternative remedies, and choosing one can affect access to the other, although pleading them in the alternative is common early in a case. Rescission makes sense when the deal itself is the problem and you would rather be out of it; damages fit better when you want to keep the bargain but be compensated for what went wrong. When we first talk, we ask why you want out and look at what has been exchanged so far, what restoring it would involve, and whether the contract contains a merger clause or a disclaimer that affects a misrepresentation claim. We also consider whether the other side may agree to unwind the transaction without litigation.
