In such a case rescission should not be established solely because the insured cashes the check. Any contrary rule could lead to gross unfairness to an insured who for various reasons, including sheer financial necessity, may feel compelled to cash a refund check even though he vigorously disagrees that there was any misrepresentation in obtaining the insurance. Here, NCAC filed an answer and counterclaim denying that Avemco had a right to rescind the policy and seeking both damages and a declaration that Avemco was required to provide coverage. After cashing the check, NCAC continued to deny that Avemco had a right to rescind. Further, in response to Avemco s motion for summary judgment, NCAC filed affidavits of its corporate officers averring that they had not agreed on behalf of NCAC to a mutual rescission of the policy.
Mutual rescission requires assent by both parties obligated under the contract.
There must be a meeting of the minds, and the rescission must be with the clear knowledge and understanding of the parties. Where a mutual rescission is founded on the conduct of the parties, such conduct must be inconsistent with the existence of the contract. Whether the parties assented to a mutual rescission is an issue of fact. 30 Colo. App. In Verploeg , the court emphasized that the conduct of the insured after cashing the check evidenced an understanding that the disability coverage was no longer in effect.