Lunch Trucks, Inc, contracts to deliver and serveMeals Catering Service's products to its clients for $5,000 per event, payable in ad¬vance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can

Question

Meals Catering also ob¬tain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accom¬plished? Explain.

Answer 1

Yes, Meals Catering can rescind the contract and obtain restitu-tion.
A breach of contract by a failure to perform entitles the nonbreach¬ing party to rescind, or cancel, the contract, and the parties must make resti¬tution, which is the returning of whatever benefit they conferred on each other. These remedies are particularly available when the breach¬ing party would otherwise be unjustly enriched, as in this question. Rescission is an action to cancel a contract—to re¬turn 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 no¬tice to the breaching party. Both parties must then make restitution to each other by returning what¬ever 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 re¬turned, an equivalent amount in money must be paid.