Termination clauses may include fees for early termination. Be sure you are willing to pay the penalty before using the clause and terminating the contract. [1] X Research source
For example, if you agree to sell your boat tomorrow and tonight a hurricane comes and damages it beyond repair, the sale becomes impossible, and both parties can be excused from the contract. [4] X Research source
For example, if you sub-lease an apartment in order to participate in a large local event such as a parade, but the parade is cancelled, you may be able to terminate the sub-lease contract if the other party involved was aware that your purpose for the sub-lease was to participate in the parade.
For example, if someone was contracted to paint a wall, the other party was contracted to pay him for his service. If the painter fails to uphold his part of the contract (painting the wall), then the other party can legally terminate his side of the contract (to pay for the service) because the painting is a condition of the payment.
For example, a cancellation clause might say that anyone involved in the contract can write to the others involved in the contract and formally cancel the contract. This can be a pre-made form or simple letter stating that you are rescinding the contract. This is only valid after they allow 30 days to pass from the time they wrote the letter of cancellation. [9] X Research source
For example, the Federal Truth in Lending Act (Regulation Z) lets you cancel certain contracts, in which your home is used for collateral, before midnight of the third business day after signing the contract. Federal law also allows you three days to cancel a contract for the purchase of $25 or more in goods or services from a door-to-door salesperson. [11] X Research source You can also look for resources from your State Attorney General’s office or on their website. Alternatively, you can check court records in your jurisdiction to see how other contracts without cancellation clauses were treated.
For example, a real estate broker accidentally tells a buyer that the property they want to buy is larger than it really is. Based on this, the buyer purchases the property. The court can find that the broker committed constructive fraud, even though he didn’t do it on purpose. If this happens, the broker will have to pay any damages to the buyer and the contract would no longer be valid.
For example, a painter says he will paint your living room brown using a specific brand of paint. Even if he knows he will use a different brand, the lie is not material. You asked for a brown living room and got one. If the paint works and is brown, the fact that the painter used the wrong brand doesn’t matter. If he paints it red instead, he has committed actual fraud.
For example, Melissa, 17, signs a contract for a mobile phone service without her parents’ permission. Since Melissa is under 18 and considered a minor in her state, she cannot be held to the contract. [14] X Research source
This is also true if something makes the action illegal after the contract is signed. For example, Adam agrees to lease property to Barbara for a commercial purpose. Just after they sign, the city rezones the property for residential use only. Because the reason for the contract is now illegal, both Adam and Barbara have a legal right to terminate the contract.
For example, you buy a piece of cattle at a low price because you and the seller believe the cattle is infertile. You later realize that the cattle is fertile. This would raise the price of the cattle from what you paid. In this case, you both made a mutual mistake that can make the contract unenforceable.
For example, if you sell a boat to your neighbor and give him an owner-financed payment plan but he stops making payments, you are entitled to a full recovery of the boat, regardless of the amount your neighbor has paid towards the full amount.
Finding cover as soon as possible to the breach of contract can help you show the court that you’ve done your best to avoid consequential damages, or further expenses due to your own failure to act. [19] X Research source For example, you may have a contract with a wedding photographer. If your photographer backs out of the contract the week before your wedding, you may need to scramble and find a new photographer at the last minute. If the last-minute photographer costs the same as your original photographer, there are no damages. If the last-minute photographer charges you an additional $500 for the lack of notice, you can ask that the original photographer pay the $500 fee.
You can hire a lawyer to file the lawsuit for you, or you can do it yourself at your local courthouse. File the lawsuit as soon as possible after the breach. States have varying statutes of limitations for how long after a breach a lawsuit can be filed, but waiting too long can prevent you from being able to take legal action against the breaching party.
Arbitration is another form of ADR. It allows you to take care of the problem without going to court. Arbitration is a good idea in complex cases or when damages are difficult to calculate. [21] X Research source [22] X Research source
