Opinion ID: 2378811
Heading Depth: 1
Heading Rank: 3

Heading: Rescission Agreements

Text: In addition, the undisputed facts in this case establish that Newcastle and the Thyes executed two cancellation and release agreements that cancelled and rescinded the May 2005 contract and any additions, addendums, and extensions. Moreover, under the cancellation and release agreements, the Thyes and Newcastle agreed to release each other from any liability or claims for damages arising out of the May 2005 contract and any additions, addendums, or extensions to that contract. By rescinding the May 2005 contract and any additions, addendums, and extensions, the Thyes and Newcastle agreed to discharge each other's duties under the contract. An agreement of rescission is an agreement where each party agrees to discharge all of the other party's remaining duties of performance under an existing contract. Restatement (Second) of Contracts § 283(1) (1979). Thus, an agreement of rescission discharges all remaining duties of performance of both parties. Restatement (Second) of Contracts § 283(2). Restatement (Second) of Contracts § 283, comment a, further explains as follows:  Nature of agreement of rescission. Sometimes the parties to a contract that is at least partly executory on each side make an agreement under which each party agrees to discharge all of the other party's duties of performance. Such an agreement is called an `agreement of rescission' in this Restatement. Consideration is provided by each party's discharge of the duties of the other. This is so even though one or both parties have partly performed their duties or one or both have a claim for damages for partial breach. Thus, under an agreement of rescission, the parties can agree to discharge the duties of the other under the contract, even though one or both parties have partly performed their duties or one or both parties have a claim of damages for partial breach. Our Supreme Court has recognized that a contract may be discharged at any time before performance is due by a new agreement with the effect of altering the terms of the original agreement or of rescinding it altogether. (17 C.J.S., Contracts, § 394.) State, ex rel. Parker v. Board of Education, 155 Kan. 754, 758, 129 P.2d 265 (1942), overruled on other grounds Singer v. City of Topeka, 227 Kan. 356, 607 P.2d 467 (1980). The promise of one party to forego his [or her] rights under a contract is sufficient consideration for the promise of the other party to forego his [or her] rights. (3 Williston on Contracts, § 1826.) State ex rel. Parker, 155 Kan. at 758, 129 P.2d 265. Here, there was sufficient consideration for the agreements of rescission because both the Thyes and Newcastle agreed to release their rights and interests in the contract and to release each other from any liability under the contract. In addition, Newcastle provided consideration by promising to pay $20,000 to the Thyes for the improvements, upgrades, and additions made to the property, and the Thyes agreed that such improvements, upgrades, and additions would remain with the property and become the property of Newcastle. Once the Thyes and Newcastle executed the agreements of rescission, neither party owed any other duties under the May 2005 contract or under any additions, addendums, or extensions to the contract. Moreover, the Thyes and Newcastle agreed to  release [] the other from any liability, claim for damages and damages, that they now have or may in the future have against any party to this Agreement arising out of the Residential New Construction Contract dated May 17, 2005, and any additions, addendums or extensions thereto and for any items the [ Thyes ] added to said house.  (Emphasis added.)  Under the plain terms of the cancellation and release agreements, the Thyes owed no further duties under the May 2005 contract and could not be held liable for any claim for damages arising out of the May 2005 contract and any items that the Thyes added to the house. Thus, the Thyes could not be held liable by Newcastle for any alleged breach of the May 2005 contract or for any additions that they made to the construction of the house at 2250 Valley View Drive.