Lunch Trucks, Inc, contracts to deliver and serve Meals 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
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 How is a contract rescinded?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.
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.
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