Contracts
Which of the following BEST describes 'rescission' of a contract?
AA court ordering specific performance
BCancelling the contract and restoring both parties to their original pre-contract positions✓ Correct
CModifying the contract terms
DExtending the performance deadline
Explanation
Rescission cancels the contract and returns both parties to the position they were in before the contract was entered into. If the buyer paid earnest money and the contract is rescinded, the earnest money is returned.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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