Rescind

To declare a contract void—of no legal force or binding effect—from its inception and thereby restore the parties to the positions they would have occupied had no contract ever been made.

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rescind v. to cancel a contract, putting the parties back to the position as if the contract had not existed. Both parties rescind a contract by mutual agreement, since a unilateral cancellation of a contract is a "breach" of the contract and could result in a lawsuit by the non-cancelling party. (See: rescission)