In bilateral (synallagmatic) contracts, if one party fails to perform its obligation when due and after being put in default, the other party — if it does not prefer to uphold the contract — may ask the court to rescind it, with compensation where warranted, provided the party seeking rescission is not itself in default of its obligations (art. 209). On a rescission request the court may grant the debtor a grace period if circumstances require, and may refuse rescission if what remains unperformed is minor relative to the obligations as a whole (art. 209).
As for withholding performance, in bilateral contracts, where the mutual obligations are due, each party may withhold its own performance if the other has not performed (the defense of non-performance), unless otherwise agreed or required by custom (art. 219).
If the contract is rescinded it is treated as never having existed, and the parties are restored to their pre-contract position; if one cannot restore the other, an equivalent may be ordered (art. 211). Note that the contract is the law of the parties, so neither may unilaterally repudiate it (art. 196).
This is general legal information, not legal advice. For advice on your specific situation, consult a lawyer licensed in Kuwait.