How to Terminate a Contract

Even though you signed a long-term contract, something came up, and you now need to go. Breaking a contract is a pretty typical occurrence, but it requires a full understanding of contracts and their conditions. Whether you want to terminate your unused gym membership contract, expensive mobile phone service contract, rental lease, or even loan arrangement, equipping yourself with the correct information will help you make a confident legal choice.

What is a contract, and why may you want to break it?

A contract is simply an agreement between two or more persons or organizations that generates a legal obligation or liability. A contract is a significant commitment with severe implications if it is breached, whether purposefully or inadvertently. Some of the most typical cases in today’s small claims court almost certainly include a violation of contract.

But, life sometimes gets in the way of contracts. Maybe your employer has been moved out of state, and you need to break your year-long lease early. Maybe the automobile you financed via the dealership was a total lemon. Maybe you want to terminate your lawn care contract because a neighbor has offered to do the same thing for half the price. Whatever the cause, finding a legal way out of a contract might be challenging, but not impossible.

Breaking out: How to Terminate the Contract

The first step in getting out of a contract is to go through the original agreement again. Examine the wording in your lease, membership agreement, or loan documents carefully. Conditions for cancellation are often stated. You may also discover a loophole or escape clause that explains how to leave early.

Can’t find what you’re looking for in the original document? There is yet hope. Have a look at the following scenarios. If one or more of these apply, you can probably get out of the deal without risking breach of contract penalties.

The deal is blatantly unfair. Contracts that significantly benefit one party are often frowned upon by the legal system. These agreements are referred to as ‘unconscionable,’ and they include provisions that’shock the conscience.’ In many of these circumstances, one party of the contract clearly has all of the power and may exploit it to profit while harming the other. For example, if your mobile phone company began charging a new price in the middle of your contract or consistently disrupted service for no apparent reason, you may be able to end the contract without incurring cancellation penalties.
The other person is the first to give up. If the other party backs out first or provides any sign that he or she is no longer interested in keeping his or her half of the bargain, you are usually free to walk away from the contract. This is known as an anticipated breach or anticipatory repudiation in the legal world. For example, if your personal trainer fails to show up for your meetings, you may be allowed to cancel future appointments and claim a refund for sessions you have already paid for due to an anticipatory breach.
The contract is broken by the other party. A major breach of contract happens when the other party violates the contract in some way. If you hired an artist to create a bespoke painting for your living room and she ends up selling the work to someone else, you are not obligated to pay for the commissioned art.
The contract is a forgery. Contracts rely on clear expectations, specific conditions, and a defined topic that sets out all of the facts. If you agree to buy a car from a used car dealer in ‘excellent’ or ‘like new’ condition, but it falls apart as soon as you leave the lot because the bumper was glued on to hide damage after a serious accident, the seller has most likely committed fraud, and you can cancel the contract without penalty. Fraud implies that the vendor was aware of the accident and damage before selling it to you, or that he did not care to verify the car’s condition before promising you that it was great.

Contracts are an inescapable aspect of life, whether you’re operating a company, updating your mobile phone service, renting an apartment, or financing a new buy via a bank. Knowing what constitutes a contract and how you may be able to avoid it might help you keep your calm in a number of legal scenarios.