What is the process called when obligations are extinguished because the obligor and the obligee become the same person?

The process whereby obligations are extinguished because the obligor (the party who owes a duty) and the obligee (the party to whom the duty is owed) become the same person is known as "confusion." In legal terms, confusion occurs when the rights and obligations of a debt merge into one entity, thereby eliminating the obligation since there is no longer a creditor-debtor relationship.

This concept is particularly relevant in the realm of obligations and contracts, where the original parties can find their responsibilities dissolved through the unification of roles. For instance, if a person holds a mortgage on a property and then inherits that property from the original lender, the debt is extinguished as the same person cannot owe a debt to themselves.

In contrast, cancellation generally refers to the nullification of a contract or agreement, novation involves substituting a new obligation for an old one with the consent of all parties, and rescission implies the annulment of a contract, returning the parties to their pre-contractual state. Understanding the nuances among these terms underscores the unique nature of 'confusion' in the context of obligations.