What is the term for the act of nullifying a contract and returning to the original state?

The term that describes the act of nullifying a contract and returning to the original state is rescission. Rescission effectively cancels the contract, rendering it void and restoring the parties involved to their positions before the contract was made. This legal remedy is often sought when there has been a breach, misrepresentation, or a fundamental reason that justifies the cancellation of the agreement.

Modification refers to changing some aspects of the contract rather than nullifying it entirely. Revocation pertains to the withdrawal of an offer or the cancellation of permission given by one party, which does not inherently return everything to the original state of affairs. Termination simply indicates ending the contract, but it may not necessarily restore the parties to their prior conditions. Thus, rescission specifically emphasizes the complete nullification and restoration aspect, which aligns perfectly with the question's focus.