Updated: Jun 23, 2020
It happens all the time. People sign a contract for a cell phone, a gym membership, a lease agreement, or a partnership agreement, among a million other things. Later on down the road, they realize that they want out. And fast! But, as the Stones say… “you can’t always get what you want!”
Contracts are beautiful tools, designed to protect all contracting parties from backing out of an investment or responsibility. Governed by state law, a comprehensive and conscionable contract can be nearly impossible to get out of without the risk of being sued.
But, I’ve included a few situations where it may be possible to avoid litigation after deciding not to honor a contract.
Fraud, Misrepresentation, or Mistake – This involves serious misconduct, including fraud and misrepresentation. If there was a mistake in the contract as to quantity, price, dates, descriptions, or other material items, you may be able to reform or terminate the contract.
Gross Unfairness – This is where unconscionability comes in. Usually, a court will find that a contract “shocks the conscious” when one party has a extremely different bargaining power than the other. This is not frequently the case.
Impossibility – This involves some unforeseen intervening circumstance outside of your control, such as a pandemic, Act of God, etc. In these situations, you may be able to get out of the contract if you can prove that your performance proved impossible due to these circumstances.
Material Breach – If the other party has failed to perform a material aspect of the contract (such as price, quantity, type of work), you may have solid ground for terminating the contract. However, always document these instances of noncompliance and follow all other provisions (CYA).
Termination Clauses – Some contracts allow a party to terminate – if they follow the procedures spelled out in the contract. These usually include an advance notification period and a buy-out provision.
Always remember that negotiation is usually on the table. Talk to an attorney about various options specific to your case.
I offer free consultations to discuss your situation and provide solutions moving forward.
Yes, I am an attorney, but I’m not your attorney and this blog does not create an attorney-client relationship. I am licensed to practice law in Mississippi and have based the information presented on US laws. This article is legal information and should not be seen as legal advice. You should consult with an attorney before you rely on this information.