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What's a contract and why might you need out?

Simply put, a contract is an agreement between two or more people or groups that creates a legal duty or responsibility. A contract is a serious promise, and there can be serious consequences if the contract is intentionally or unintentionally broken. Some of the most common cases in today's small claims court likely involve some kind of contract breach.

Sometimes, though, life interferes with contracts. Maybe your job has been transferred out of state, and you need out of your apartment's year-long lease early. Perhaps the car you financed through the dealership turned out to be a complete lemon. Maybe you want to cancel you contract with a lawn service company because a neighbor has offered to perform the same job for half the price. Regardless of the reasoning, finding a legal way out of a contract can be difficult but not totally impossible.

Breaking out: How to end the contract

The first step in getting out of a contract is to re-examine the initial agreement. Pull out a copy of your lease, membership agreement or loan paper work, and look closely at the language. In many cases, conditions for cancelation are included. You also might find a loophole or escape clause that might tell you how to get out early.

Can't find the information you need in the original document? All hope isn't lost. Consider each of the following situations. If one or more apply, you can likely escape the contract without facing breach of contract charges.

  • The agreement is grossly unfair. In most cases, the legal system seriously frowns upon contracts that heavily favor one side. These agreements are called 'unconscionable' and contain terms so outrageous that they 'shock the conscious.' In many these cases, one side of the contract obviously has all of the power and might use it to make money while hurting the other side. For example, if your cell phone provider started charging a new fee midway through your contract or routinely interrupted service for no reason, you might be entitled to break the contract without paying cancelation fees.
  • The other person gives up first. If the other party backs out first or gives any indication that he or she is no longer interested in upholding his or her end of the deal, you're typically free from the contract. In legal terms, this is called an anticipatory breach or anticipatory repudiation. For example, if your personal trainer stops showing up to your appointments, you might be able to cancel your future appointments and seek a refund for sessions you already paid for under an anticipatory breach.
  • The other party breaches the contract. A material breach of contract occurs when the other person involved does something to void the contract. If you contracted with an artist for a custom painting for your living room, but she ends up selling the piece to someone else, you're off the hook when it comes to paying for the commissioned art.
  • The contract is fraudulent. Contracts depend on clear expectations, definite terms and a transparent subject that spells out all the details. If you contract with a used car dealer to buy a car in 'excellent' or 'like new' conditions, but it falls apart as soon as you leave the lot because the bumper was glued on to hide damage after a serious accident, the seller has likely committed fraud, and you can escape the contract without penalty. Fraud would imply that the seller knew about the accident and damage before he sold it to you, or that he didn't bother to actually check the car's condition before assuring you it was perfect.

Regardless of whether you're running a business, upgrading your cell phone service, renting an apartment or financing a new purchase through a bank, contracts are an unavoidable part of life. Having a base of familiarity about what makes up a contract and how you might be able to escape can help you stay cool in a variety of legal situations.

As always, you can start a business contract by answering a few simple questions.  

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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