How to Get Out of a Contract with a Contractor

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How to Get Out of a Contract with a Contractor

If you have signed a contract with an Arizona contractor and subsequently decide you do not want to proceed with the contracted work, you may have a few options to void the contract without liability, depending on the circumstances surrounding your agreement.

In Arizona, contractors are required to be licensed for any work that exceeds $1,000, including labor and materials, or if the work requires a building permit.   Only licensed contractors may enforce a contract, so if you’ve made an agreement with an unlicensed contractor, you may be able to cancel that contract with no legal consequences.

While many states have laws that allow consumers to cancel contracts within a certain time period, Arizona only permits this in a few instances:

  • Telephone solicitation of merchandise or premium (within 3 business days)
  • Telephone solicitation of a business opportunity (within 10 business days)
  • Sales of credit services (within 3 business days)
  • Dance studio contracts (within 15 business days)
  • Health spa contracts (within 3 business days)
  • Discount buying services (within 3 business days)

If you have a valid reason for cancelling your contract with a licensed contractor, there are several valid legal reasons for ending your contract early:

Termination clause.

Many contracts contain a termination provision that 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 — for example, the house you contracted renovations for burns down — this can be a reason for early termination since 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A contract may be terminated and rescinded if the other party defrauded you into the contract itself, or if you were mistaken about a material fact about which the other side knew about and used to its advantage. Of course, cancelling the contract on such grounds can lead the other party to file suit.

Williams Mestaz, L.L.P., is a law firm with decades of experience in commercial litigation, including business divorce, aviation, and high stakes litigation. Contact us at (602) 256-9400 and schedule a time to meet with us today.

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