Civil Transactions
Civil Transactions Law (10): Termination and Rescission
The contracting parties may mutually rescind the contract, in whole or in part, by consent.
Mutual Rescission
The contracting parties may mutually rescind the contract, in whole or in part, by consent. The rescission shall be subject to the same conditions as the original contract.
Option to Withdraw
A contract may include an option clause allowing a party to withdraw, provided the option is limited to a specific period. If no period is specified, the court shall determine it. If the option is exercised, it is considered a termination of the contract.
Breach of Contractual Obligation
If the contract is bilateral and one party fails to fulfill their obligation, the other party may notify the breaching party and terminate the contract with compensation. The parties may agree in advance that termination may occur without a court ruling in the event of breach.
Impossibility of Performance
If the performance of the obligation becomes impossible due to a cause beyond the debtor’s control, the obligation and the corresponding obligation shall be extinguished, and the contract shall be automatically terminated. If the impossibility is partial, only the impossible part and its corresponding obligation shall lapse.
Defense of Non-Performance
In bilateral contracts where reciprocal obligations are due, either party may withhold performance if the other party refuses to perform their corresponding obligation.
Effects of Termination and Rescission
- In both termination and rescission, the parties shall return to their pre-contractual position. If this is impossible, the court shall award compensation.
- In contracts of continuous or periodic nature, termination or rescission shall have no retroactive effect.
- Termination shall not be invoked against a good-faith particular successor.
- Termination shall not affect clauses related to dispute resolution or confidentiality.
Legal disclaimer: The information published on the website and social media platforms of Eyad Reda Law Firm LLP ("the Firm") is provided for general informational purposes only and does not constitute legal advice or a legal opinion. Use of this information does not create a lawyer–client relationship. While the Firm strives to ensure the accuracy of the content, it accepts no liability for any loss or damage arising from reliance on it. Users are advised to obtain specialised legal advice by submitting a formal request through the Firm's approved communication channels.