In contract law, which statement best describes rescission under common law and under the UCC?

In contract law, which statement best describes rescission under common law and under the UCC?

• A. At common law, rescission requires new consideration; under the UCC, a written waiver can release obligations without new consideration.
• B. Both common law and UCC require the same consideration for rescission.
• C. Common law permits rescission by mere agreement; UCC prohibits rescission without writing.
• D. Rescission is never allowed once performance has begun, under either framework.

Answer: (A)

Rescission cancels a contract and returns the parties to their pre‑contract positions. The big difference here is how each framework treats consideration for that cancellation. Under common law, rescission is treated like a new bargain to undo the contract, so something of value must be exchanged—new consideration is required to support the promise to rescind. Without that, the rescission isn’t enforceable. Under the Uniform Commercial Code for contracts involving the sale of goods, the rules are looser about consideration for modifications or rescissions. A mutual agreement to release obligations can be effective without new consideration, especially if the modification is in writing to satisfy the Statute of Frauds. A signed written waiver can release obligations even though no new consideration is given. So the correct idea is that rescission at common law requires new consideration, while under the UCC a written waiver can release obligations without new consideration, reflecting the different treatment of contract changes for goods. The other statements fail because they misstate the need for consideration under common law, the effect of the UCC on modifications, or whether rescission can occur after performance has begun.

Rescission cancels a contract and returns the parties to their pre‑contract positions. The big difference here is how each framework treats consideration for that cancellation.

Under common law, rescission is treated like a new bargain to undo the contract, so something of value must be exchanged—new consideration is required to support the promise to rescind. Without that, the rescission isn’t enforceable.

Under the Uniform Commercial Code for contracts involving the sale of goods, the rules are looser about consideration for modifications or rescissions. A mutual agreement to release obligations can be effective without new consideration, especially if the modification is in writing to satisfy the Statute of Frauds. A signed written waiver can release obligations even though no new consideration is given.

So the correct idea is that rescission at common law requires new consideration, while under the UCC a written waiver can release obligations without new consideration, reflecting the different treatment of contract changes for goods. The other statements fail because they misstate the need for consideration under common law, the effect of the UCC on modifications, or whether rescission can occur after performance has begun.