I would like to get out of a contract early, is this possible?

October 11, 2016

A common question asked of many legal professionals. This short blog will provide some sound legal advice for business where this scenario occurs.

1.     Termination or Cancellation Clause

This is your first port of call! Are there provisions to bring the contract to an end early? If so what do you need to do? Normally you will be required to give notice in writing to the other side. It is normally also required that this is done within a certain time frame or a set number of days. It’s sensible to also note whether this is an automatically renewing contract. It always pays to read the small print! If there is scope to bring the contract to an end early are there any penalties or fees to pay on doing so? Is cancellation of the contract allowed in certain circumstances? If so there will be instructions in the contract on how to do this and time frames so read carefully. Termination or cancellation provisions are normally found towards the end of a contract and will look something like this:

“This contract shall be for an initial period of 12 months from the commencement date. Either party has the right to bring this contract to an end by giving the other 30 days notice in writing by Royal Mail Recorded Delivery”

Make sure you comply strictly with the wording of the clause.

2.     Breach

There is no termination or cancellation clause. Can you establish that the other party has breached the contract allowing you to terminate the contract? Can you establish that the person you entered into the contract with knowingly breached its terms? Have they upheld their end of the bargain, performed their duties,  and made payments to you on time and in line with the contract provisions? If not there is a possibility you could raise this to bring the contract to an early end.

 3.     Is the Contract Impossible or Frustrated?

Is there a change in circumstances after the contract has been made? It is no one’s fault but now it renders the contract impossible to perform or deprives it of any commercial benefit? Are you personally incapacitated or does performance of the contract render it illegal? Consider this angle for another option to terminate.

4.     Negotiation

Sometimes it really does help to talk! Attempt to negotiate an end to the contract with the other party. Can you mutually agree to bring it to an end? Perhaps you can offer the other side a compromise in the form of a fee or uphold your end of the contract for a few months longer. If you do agree something, take legal advice for your business and have a solicitor draw something up for you.

5.     Legal Advice for Business

Seek the advice of a solicitor. It’s always sensible to have a pair of legal eyes scan over your contract!

 

Hannah Newell – LawBite LawBrief. For further legal advice, you can contact Hannah via our online legal advice portal.

 

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