Explanation:

- Option 1: Rescission by mutual agreement happens when both parties decide to cancel the contract. This is a common practice when both parties agree it’s best to end their obligations.

- Option 2: Rescission occurs where one party fails to perform their part of the promise. In legal terms, this is known as breach of contract, which can allow the non-breaching party to rescind.

- Option 3: This combines both options 1 and 2, indicating rescission can happen through mutual agreement or due to a breach.

- Option 4: This states neither mutual agreement nor breach allows for rescission, which is generally incorrect in contract law.

Option 3 is indeed correct.

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