GET ME OUT: 3 Ways to Get Out of A Contract

So, you signed a contract, and you need out of it. This happens everyday. Whether it is buyer’s remorse, a changing situation, or just nagging hindsight is 20/20. The fact remains, you want to get out of the contract you signed. From a legal perspective, you can’t. A binding contract is finished when it the contract says it is finished, and both parties have to do what they said they were going to do; what they promised. But you know that already. You are reading this article because regardless of the legal obligations you promised to perform, you want out. So the below are a few options, on how to get out of a contract after signature. These are not guarantees, and they all have downsides, but at least you’ll know your options.

Ask For Permission

The first and best option; is to ask for permission to exit the contract early. Given that suing is so expensive, and that a random notice of breach or force majeure(discussed later) usually creates friction, just informing the other party that you can’t or won’t perform the rest of the contract can be surprisingly effective. This “exit with permission” often includes renegotiated exit terms but such terms are often better than the early breach risks you would face without the other party’s permission. Maybe the other party comes down on price or your performance obligation. Maybe they give you the opportunity to find someone else who can replace you. All parties have the obligation to mitigate damages. This means that if the other party, can mitigate the damage that might flow from your breach, they have to. Please beware that giving another party notice that you intend to breach, may contractually give them the option to ask for the money or performance right away.  But if you can negotiate by being open and honest, sometimes both parties can come to a better solution together.

Enforce A Provision That The Other Party Breached First

The next option involves you, and preferably an attorney, reading the contract carefully with the true facts backed by evidence in mind and coming to the determination that the other party materially breached the contract first, thus allowing you to terminate the contract within the terms of the agreement. You can enforce this scenario by giving the other party notice that they have materially breached the contract, thus terminating your obligation to pay or perform. This of course must be true, and must be an option stated in the contract. By ‘stated in the contract, I mean, the contract states that the breach you are alleging allows you to specifically terminate the contract and halt performance or payment of any obligation. This scenario is most likely an option if the contract has specific deadlines and notice requirements that were expressly stated as material points of the contract and that time was of the essence. If the other party failed to perform an obligation under the contract that was stated as material or a condition, then you may have the option of terminating the contract and your own contractual obligations. Again, this option is fact, contract, and law specific but worth looking at before simply breaching a contract. There could be a legitimate legal argument in your favor.

Enforce A Provision that Ends the Contract

This next option is likely apparent, as soon as the situation arises, and is again fact, contract, and law specific. Maybe, a hurricane came through the town, and now you don’t have the supplies or building that you assumed you would have to perform the contract.  Maybe there is a international trade war that you didn’t cause, but you are unable to perform your contractual obligations. Most contracts include Force Majeure provisions that address these types of scenarios; scenarios where an unknowable and uncontrollable circumstance makes performance of the contract impossible. Because you cannot predict the weather, war, or riots, contracts usually include such provisions. Therefore, if such an event occurs and such a provision is in your contract, you can usually walk away just by giving notice to the other party, but only to the extent the event prevents the parties from performing under the contract. Again this option is fact specific, but there are times when the reason why you want out of a contract is specifically expressed in the contract as an option.

To conclude, the best option for getting out of a contract is to complete the contract. However, if you do find yourself wanting out of a contract the above 3 options are usually worth looking into.

THIS IS NOT LEGAL ADVICE, THIS IS JUST INFORMATION. I AM NOT YOUR ATTORNEY. GO GET AN ATTORNEY.