How to Terminate a Contract

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How to Terminate a Contract

If you want or need to get out of a contract without the fear of landing in breach of contract litigation, there are several valid legal reasons for ending your contract early:

Termination clause. Many contracts contain a termination provision which gives you the right to terminate in certain circumstances, typically requiring a minimum notice period. There may be financial penalties for doing so, but if you meet the obligations set forth in the termination clause, the other party has no legal grounds to pursue a breach of contract claim.

Impossibility. If you cannot meet the terms of a contract due to an unforeseeable event or act of nature, this can be a reason for early termination since your performance has been prevented by something beyond your control.

Material breach by the other party. If the other party materially breaches the contract, you have legal standing to stop performance and end the contract.

Rescission. A contract may be terminated and rescinded if the other party defrauded you into the contract itself, or if you were mistaken about a material fact about which the other side knew and used to its advantage. Of course, cancelling the contract on such grounds can lead the other party to file suit.

Frustration of purpose. When an unforeseen event undermines the sole purpose of a contract — and both parties were aware of the purpose — the contract may be voided. For example, if a company enters into a contract to lease a building that is later condemned prior to the company’s occupation of the space, the agreement can be rescinded with no obligation.

Completion. Once the obligations detailed in a contract are completed, the contract is essentially terminated.

Prior to making any move that could lead to breach of contract litigation, you should consult with an attorney for advice on legally terminating a contract.

When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Williams Mestaz, L.L.P., at (602) 256-9400 to speak with us about your case.

 

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