Breaking a Contract in a Crisis: 10 Ways to Break Your Contract Lawfully
A contract is legally binding, to an extent, so to discover more about the 10 ways breaking a contract can be achieved lawfully, and more, read on…
Right now, businesses are under a huge strain to continue as normal, but trying times certainly call for extreme circumstances. So, what can be done to alleviate the pressures facing many companies right now?
A commercial dispute litigation could be the first step to tackling these challenging times, which may change the circumstances of a contract. We’ll be discussing this more later, but what occurs when an agreement can’t be decided upon?
Can a contract be broken and, if so, how can you go about this task? To discover the answers to these questions, you came to the right place…
Types of Contract
Before we get started on the ins and outs of breaking a contract, it’s first important to assess what types of contracts are out there. This way, we can get a greater understanding of the sorts of situations wherein contracts are signed. Some of these are as follows…
- Simple: any kind of oral or written agreement.
- Lump Sum/Fixed Price: an agreement to pay for a service, which will be done to an agreed schedule, at a fixed price right at the start or end of the agreement.
- Cost Plus: this includes an agreed rate for extras, like labour costs and material prices, throughout the operation.
- Bilateral: a contract based on both parties doing certain things.
- Unilateral: both parties have to do their part, based on one person bidding on the performance of the other.
- Time and Material: these come into place when the cost of materials and timings are undetermined at the start of the contract. These are a little more risky, as this relies on the project to get done in a timely manner.
- Unit Pricing: this is essentially a contract which will be paid at an hourly rate of someone working.
- Adhesion: the advantageous bargaining party creates this contract, allowing the weaker person to accept or reject it; all or nothing.
- Aleatory: a mutual agreement which comes into effect when certain events take place. Both parties accept that there may be risks involved with this.
- Implied: where the contract is implied in law or in fact. In these cases, the obligations within the contract are based on an unspoken agreement, rather than on verbal or written words.
When a Commercial Dispute Leads to a Break in Contract
When a dispute arises between people involved in trade and commerce, the first step is to attempt a dispute resolution. This way, the dispute can be resolved without bringing in someone more senior. It can also help to avoid any contractual breaks; if this misunderstanding or disagreement can be resolved, the contract can be continued as normal.
For example, one person might think that the other party within the contract is not upholding the end of their contractual agreement. In this case, they won’t necessarily want to end the contract immediately, and may be willing to talk it out to create a fixed deadline for the completion. Sometimes, an outside third party will even get involved to help the two contractual parties come to some sort of conclusion.
In times like today, when circumstances are so unsure, dispute resolution may be the first step to re-evaluating an agreement before any rash decisions are made. Through reassessing the situation, based on current events, new clauses in the contract can be drawn up, rather than cancelling it altogether.
10 Ways to Break a Contract Lawfully
However, in many cases, dispute resolution may not always be so successful. So, in these cases, breaking a contract lawfully may be your only choice. This can be done in a number of ways so, to find out how to get out of a contract lawfully, read on…
1. Read Through it Carefully
First and foremost, there may be something you missed in your initial perusal of the contract when you first signed it. So, read over it again to see if you may have missed anything or forgotten about something from the first time. When re-reading it, be sure to review the termination of contract clause, as there may be a loophole here that you can take advantage of.
2. Check for a Breach
The next step is to check whether the other contract party has breached certain elements of a contract themselves. If you can discover anywhere where this may have occurred, you have an instant out. After all, if they can’t uphold their end of the bargain, then why should you?
3. Look Out for Important Dates
One of the common loopholes in contracts that many people might not know about is the potential to leave a contract at certain times of the year. For example, contracts usually operate on a yearly term, and are automatically renewed on this date. Due to the crossover between these two years, you might be eligible to exit the contract during this time.
4. Were You Misled?
So, what about if the contract turns out to be completely untrue, and essentially fraudulent? Well, in that case, you’re free to leave without much interference from anyone else.
A fraudulent contract includes any contract that was signed on the basis of specific written or verbal terms, and then these aren’t met. So, what exactly counts as a fraudulent or misleading contract? Some classic examples include:
- You rent a house on the basis that the landlord will remove all the damp from the house and, on arriving, this hasn’t occurred;
- You purchase a car on the assurance that the car is brand new, but it stops working a few weeks after you leave the car shop;
- Your phone contract is signed on the basis you’ll get a new free phone if you break yours, and they don’t carry this through.
5. Check if the Contract is Grossly Unfair
Grossly unfair acts, in most cases, refer to the late payment of contractually obliged money to a business. According to a 2015 study, small businesses were collectively owed around £3.4 billion due to clients making late payments, or not paying at all. So, if something like this keeps going ahead, you have every right to quash that contract where it stands.
6. The Law of Frustration
The Law of Frustration is a classic way to end a contract. This is any situation where the circumstances of a contract change, which alters the agreement, and can make it null and void.
For example, during a time of crisis, like the Coronavirus, many employment contracts may not be feasible anymore. Because the employer cannot uphold their end of the contract anymore, they have the right to terminate this contract. Obviously, in many cases, these circumstances can be disputed in a court of law, but it’s all about how the current situation effects the terms and conditions.
This could also be the case if a traumatic event has occurred, like the death of a family member. If the person is no longer mentally capable of upholding their end of the deal, it could change the terms.
7. Check to See if the Contract is One-Sided
In some cases, a contract might be one-sided, or unconscionable, meaning it benefits one party over the other. This could make a valid contract void, and could include a number of circumstances, namely:
- One person pressures the other into signing, by taking advantage of them or threatening them;
- One party has an advantage over the other, for example, they were aware that the other didn’t understand the terms of the contract completely;
- When one party includes an unknown clause in the contract, without the other’s knowledge;
- Or, if one party attempts to limit their own liability if they breach the contract.
8. Have the Contract Circumstances Changed?
The Law of Frustration is one way that circumstances may change, causing the destruction of any contract. But, a lot of these are external causes, and cannot be helped. That said, other circumstances might change within a business, which could also render the contract void.
For example, say a company owner changes the way they run the company; perhaps it goes under new leadership. This change in the conditions of the employment could mean that the employee has every right to leave without upholding their notice, breaking a contract of employment. After all, they signed the contract under as certain premise, which now no longer exists.
9. Complete the Contract Wishes
Although this might not be for everyone, one way to end a contract could be to complete your end of the bargain. By ticking off every box within the agreement, and making sure you’ve upheld your end, the contract will seize, on your part. Then, it’s just a matter of time, whilst you wait for the other party to uphold their end of it.
10. Ask the Other Contract Holder
It’s only natural to think of all the in-depth ways you could work out how to get out of a business contract. That said, did you ever think about simply asking the other contract party if you can end the contract? In many cases, this will be completely feasible, and who knows, they may have been wanting to end it in the first place too!
If this is the case, both parties will have to sign an agreement contract, ending the initial contract. This way, the process is in writing, and neither of you have to worry about bringing in any court of laws along the way. It’s done-and-dusted and can now be forgotten.
Breaking a Contract Might Be Simpler Than You Thought!
Clearly, a contract is only legally binding to an extent. If you look closely enough, you may find a loophole which gets you out of the firing line, as we’ve seen here.
Have you got any more insights into the common ways you can lawfully break a contract? Or, perhaps you have some more questions? Leave any comments down below, and we’ll be sure to answer as many as possible!
We hope you enjoyed this promoted piece as much as we did!