Under California law, what does the term 'rescission' mean in the context of a real estate contract?
Correct Answer
C) The contract is cancelled and the parties are restored to their original positions before the contract was made
Under California Civil Code §1688 and §1689, rescission is the unwinding of a contract, restoring each party to the position they occupied before the contract was executed. The buyer receives back their deposit and the seller retains ownership of the property, as if the contract never existed.
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Related Topics & Key Terms
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Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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