How to Legally Terminate a Contract

What you’ll discover:

What exactly is a contract?
Is it necessary to have a written contract in order for it to be valid?
What is the most straightforward method to breach a contract?
What if the other party want to hold me accountable?
What if my contractual duties are irrational?
When does a contract become null and void?
Do you need assistance legally breaking a contract?

The worldwide COVID-19 epidemic, as well as the following social distance restrictions, have altered practically every aspect of people’s life. Notably, many activities requiring human interaction are either discouraged or downright prohibited. Some contractual conditions have become problematic or even impossible to fulfill due to these and other pandemic-related factors.

If you find yourself with no option but to breach a contract during this crisis, it is critical that you do it lawfully. Otherwise, you may be held accountable for contract violation. There are a few fundamental methods to legally breach a contract, some of which are especially relevant to the present issue. We’ll address some of your questions regarding contracts and how to break them legally.

What exactly is a contract?

A contract is an agreement between two or more parties that establishes a legal obligation to comply. This implies that you are legally compelled to carry out the terms of the contract, and refusal to do so constitutes a breach.

A contract must have the following three elements:

Offer. A precise offer describing the contract’s parameters (i.e., the responsibilities and expectations of each party involved)
Acceptance. The second party accepts the conditions of the offer, either in writing (preferred) or verbally.
Consideration. The actual fulfilment of the contract’s terms: an agreement for exchange, such as money, a trade of commodities or services, and so on.

Is it necessary to have a written contract in order for it to be valid?

Spoken contracts are just as legally binding as written ones. Certainly, if there is dispute or disagreement between the parties about the contract’s terms, having a written document to refer to is preferable.

What is the most straightforward method to breach a contract?

When you decide to breach a contract, you should think about just deferring your commitments. If you wish to keep your professional connection, requesting a Contract Modification may be a good first step before terminating the contract. If you and the other party get along well, you may be able to modify the terms of your contract to accommodate your new circumstances. A Force Majeure Notification might help you get the dialogue started.

If the other party is unable to execute their end of the contract, or if you are unable to postpone to a later date, you may want to consider dissolving the arrangement. A Notice of Contract Termination may be used to record and convey this decision.

In any instance, both parties have the option to change or cancel the contract. Just ensure that the modifications are recorded in writing.

What if the other party want to hold me accountable?

Typically, consulting with a lawyer is the best approach to resolve a contract problem. Before you do so, verify your contract to determine what the termination terms and circumstances are. Most contracts include cancellation clauses, but even if there isn’t one, there may be a loophole or “escape clause” written into the agreement. A force majeure provision, for example, may release you from your responsibilities owing to a “act of God.”

A typical word used in legal papers that releases parties from their contract if an unusual occurrence or condition arises that prevents them from executing their contractual obligation is force majeure. But, just including this language in your contract does not make it immediately enforceable. A court must examine several reasons before excusing a party. Here are a few things to think about if the contract is breached due to COVID-19:

Is the language “pandemic,” “disease,” “epidemic,” or anything else similar in the force majeure clause? Courts interpret these clauses carefully.
When was this agreement written? Has any state or nation proclaimed a state of emergency at the time of writing and signing?
Is the performance legally prohibited or impossible to do, or is the cost of performance just higher?
Is COVID-19 directly responsible for the contract’s non-performance?

If you are thinking about breaking a contract, be sure you understand the provisions of your individual arrangement. A lawyer can assist you in interpreting contract provisions and explaining your rights.

What if my contractual duties are irrational?

A contract might be deemed “unconscionable” by a court if it includes conditions that are so absurd that they shock the conscience. To evaluate this, a court would consider several aspects of the contract, such as the parties’ negotiating strength or unjust conditions in the agreement.

In many of these circumstances, one party to the contract plainly has all of the power and may use it to benefit themselves while harming the other. Inquire with a lawyer if you have any doubts regarding the exact conditions of your contract.

When does a contract become null and void?

Contracts rely on defined expectations, specific terms, and openness. A court may declare it invalid if there are misrepresentations or unrealistic stipulations. A void contract is one that is legally unenforceable at the state or federal level.

A contract may also be voidable for the following reasons:

Falsification or misrepresentation of facts
Terms that are ambiguous or hard to execute
Terms that are very one-sided
The contract has criminal elements.
A party was compelled to sign.
One of the parties was unable to sign (e.g., One party lacked mental capacity or was under the age of 18 at the time of signing.)