Mutually rescinded contract means?

• A. One party withdraws unilaterally
• B. The contract is voluntarily revoked by all parties
• C. The contract is void due to fraud
• D. The contract automatically terminates upon breach

Answer: (B)

Mutual rescission means both parties agree to cancel the contract and release each other from all obligations. This is exactly what happens when the parties decide together that the agreement should be undone, returning them to the pre-contract positions as if the deal never occurred. It’s different from a unilateral withdrawal, where only one side backs out on their own, and from a voided contract for fraud, which happens because of misrepresentation or deception. It’s also not the same as termination after a breach, which is a remedy for one party failing to meet terms; mutual rescission is a voluntary, joint choice to end the contract entirely. Often this agreement is put in writing to prevent later disputes and to document the release of obligations.