Faskh al-aqd (فسخ العقد) refers to the termination (dissolution) of a contract (aqd) unilaterally (by one party to the contract) due to some incident or occurrence or an impermissible term rendering it invalid. Usually, faskh takes place outside of the will of the contracting parties due to causes related to the parties or the subject-matter (mahall al-aqd) that render the contract voidable (fasid).

On the other hand, iqalat al-aqd (iqalah) is the rescission of a contract (aqd) (which is, nevertheless, a valid contract) by mutual agreement of the parties. Iqalah usually involves an option-free contract (a contract that has no embedded options or khiyarat– plural of khiyar). It is commendable or desirable (mustahabb) by shari’ah, unless it is set as a condition (shart) in a binding contract (aqd lazim), then it becomes compulsory (wajib).

Iqalat al-aqd is a type of faskh al-aqd. That is, faskh al-aqd is broader and includes iqalah al-aqd, among others.