How to Rescind a Signed Business Agreement in Ohio
Generally, rescission is a remedy in equity that allows a party to a contract to cancel the agreement and return the parties to the position they were in before entering into the agreement. If money or some other consideration has been exchanged, the party giving the money or consideration is entitled to have that money or other consideration returned.
In Ohio, particularly in agreements between businesses (unless the business can meet the definition of "consumer" under various consumer protection laws), there is no statutory right to rescission. Rather, rescission is only "available when legal remedies are inadequate, equity principles are not violated . . . and there is no undue harshness from the remedy," according to Peter B. Friedman in "Ohio Contract Remedies: An Outline." This means that unless the businesses involved in the agreement all mutually agree to cancel the contract, a lawsuit will be needed. In the suit the business seeking to rescind the agreement will petition a court to order the equitable remedy. Simply speaking, an equitable remedy is relief fashioned by the court in instances where remedies afforded by statutory law are inadequate.
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Instructions
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Steps
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Determine if the reason you want to cancel the contract falls within one of the grounds for which courts in Ohio have traditionally granted rescission. These are:
1. Fraud, incapacity, duress, undue influence, or mistake;
2. Material breach in performance of a promise;
3. Rescinding party who has returned other party to the status quo may recover what he has put into the contract.
(Failure of consideration alone, without fraud, is not grounds for rescission. This means that if the business or individual gave you a check and the check bounced, that fact alone is insufficient ground for a court to rescind the contract.) -
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Attempt to get the other businesses to the agreement (parties) to agree to cancel the contract. It will help your cause tremendously if you can set out in clear and concise terms how one or more of the grounds for rescission are present and that most likely a court will grant the relief you are seeking. You should send a well-argued letter, certified mail, return receipt requested, to each business or person who signed the agreement.
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Ask the other businesses to the agreement if they will agree to some form of alternative dispute resolution if you are unable to persuade them to cancel or rescind the agreement. You might consider one of the three most popular forms of alternative dispute resolution: mediation, arbitration and settlement negotiations.
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Hire an attorney if you are unable to resolve the matter on your own. Unless your business is a sole proprietorship, Ohio law requires that you be represented in court by an attorney if your claim is over $3,000. If your claim is less than that, you can file it without an attorney in small claims court.
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Tips & Warnings
Rescission of an agreement is an extraordinary remedy.The burden is on you to show that one of the grounds for rescission is present. You cannot rescind an agreement merely because you discover it is a bad deal or you change your mind.
Some bar associations provide free mediation services. Check with your local and county government to determine if either offers a dispute resolution service. The Better Business Bureau and the Chamber of Commerce are also sources for free or low-cost help in resolving business disputes.
If a judge finds that a provision of the agreement can be held invalid without rescinding the entire agreement, the court will most likely refuse to rescind the entire agreement.
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