People enter into a number of different contractual agreements every day. Not all of these contracts work out, and in these situations, careful legal attention may be the only way to achieve a resolution that is equitable and reasonable. One way that bad contracts can get resolved is through rescission.

Contract rescission works by putting the parties as close as possible to their original positions before the contract was formed. This is useful for contracts that never should have existed but may also be useful for consumers who are reconsidering certain deals immediately after agreeing to them. The laws on which contracts may be rescinded are complicated and come from legislation on both the state and the federal level.

To get critical and immediate advice on how to deal with a bad contract, we urge you to reach out to the dedicated Baltimore contract attorneys at Heyman Law Firm as soon as possible. By calling our offices right now at (410) 305-9287, you can obtain your first case evaluation for no charge.

What is Contract Rescission?

Contract rescission is the legal term used for when a contract is formally terminated or cancelled. In other words, contract rescission ends the contract. If a contract is rescinded, it loses all legal enforceability, and the parties no longer owe the responsibilities that they otherwise might have.

In practice, contract rescission is used to put the parties back to their original position before the agreement was made. This functions as if the parties were to go back in time to the position that they were in before entering into the contract.

When contract rescission occurs, the entirety of the contract is voided. You cannot rescind part of a contract and leave another part whole through contract rescission. To void only a part of a contract, the requisite process is called contract reformation. Achieving contract reformation often will require determinations made by a judge or arbitrator. You will always want a seasoned Maryland contract attorney representing you when dealing with these matters.

When is Contract Rescission Used in Maryland?

Contract rescission is used as an equitable remedy for breach of contract. Breach of contract occurs when one party is either unwilling or unable to perform their responsibilities under the terms of the contract.

Contract rescission is also often used in situations where there were issues with how the contract was formed. If a court determines that a contract should not have existed in the first place, they will often use rescission to nullify its effects. Examples of situations where courts may use rescission to nullify a bad contract include the following.

Incompetence

No contract should be honored when one of the parties to the contract was not competent at the time that it was formed. Competence means a number of different things in Maryland. People who are underage or intoxicated at signing will likely be deemed incompetent for the purposes of contract law. Also included in this definition are those who struggle with conditions that cause mental deficits.

Duress

Contracts only exist when the parties to them agree by free will. If a party to a contract is forced into signing, their agreement should not and does not mean anything. In this context, force does not need to mean physical threats of violence. Parties who reasonably feel that they do not have the option to decline the contract may also be considered to be under duress.

Fraud

Agreeing to the terms of a contract implies that all parties have an accurate and thorough understanding of the terms in question. If one party makes material misrepresentations about the facts at hand, a court will likely order that the contract should be rescinded. For instance, if someone agrees buy a classic car that is advertised as having original parts, despite having been fully redone, the seller’s fraudulent claims could result in the rescission of the sale contract.

Mistake

If a party signs a contract with a fundamental misunderstanding of the deal, fraud is not a requirement for the contract to be rescinded. For example, let’s say that someone agrees to sell real property that they do not actually have the right to sell. This happens more often than you might think, and rescission of the sale contract may be the only fair resolution.

Maryland’s Door-to-Door Sales Act for Contract Rescission

If none of the above issues that may lead to contract rescission exist, the options for rescinding a contract under the law are very limited. However, Maryland law provides a specific out for contracts involving door-to-door sales.

Under the Door-to-Door Sales Act in Maryland (which expands on the Federal Trade Commission’s Cooling-Off Rule) customers who enter into certain contracts have the right to rescind the contract without needing to provide a reason at any point within a limited period of time following the formation of the contract. This law only applies to purchases that are made at your home or other locations that are not the seller’s permanent place of business.

The amount of time that you have to provide formal Notice of Rescission to the seller depends on the nature of the contract. For instance, parties have three days to rescind contracts with health clubs, credit service centers, and weight-loss programs. Residents of Maryland have five business days to rescind contracts for home improvement services, and if the individual is age 65 or older, this period extends to seven business days. For timeshares or vacation clubs, the window to rescind a contract is ten business days.

Need Help with a Contract Dispute? Call Heyman Law Firm’s Maryland Contract Attorneys Today

To learn more about contract rescission and how you can benefit from the services of a seasoned Columbia contract lawyer, reach out to Heyman Law Firm today at (410) 429-7856 to get a free initial case evaluation.