Quicksilver Delivery Service contracts to deliver Pete's Pizza Parlor's products to its customers for $5,000, payable in advance. Pete's pays the money, but Quicksilver fails to perform. Can Pete's rescind the contract? Can Pete's also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.

Question

What will be an ideal response?

Answer 1

Yes, Pete's can rescind the contract and obtain restitution. A breach of contract by a failure to perform entitles the nonbreaching party to rescind, or cancel, the contract, and the parties must make restitution, which is the returning of whatever benefit they conferred on each other. These remedies are particularly available when the breaching party would otherwise be unjustly enriched, as in this question. Rescission is an action to cancel a contract¾to return the parties to the positions they were in before the transaction. It is also available in cases involving fraud, mistake, duress, or failure of consideration. To rescind, a nonbreaching party must give prompt notice to the breaching party. Both parties must then make restitution to each other by returning whatever was conveyed in execution of their contract. If the goods or property conveyed can be returned, they must be. If the actual items cannot be returned, an equivalent amount in money must be paid.