Commercial Law: Understanding Your Options for Getting Out of Contract

Law Blog

Contracts can be beneficial because they ensure that your agreements with investors, partners and customers are official. If the other party goes against your agreement, you can minimise the financial losses by using the formal contract to proof the existence of the deal. Unfortunately, a contract can also put your business at a disadvantage. Simply speaking, you might sign a disadvantageous document or become trapped in an unfavourable business relationship. If you abandon the deal without a plan, you could expose your business to high losses. Therefore, if you are interested in getting out of a contract, you should consider the below tips to break off the relationship with minimal repercussions.

Look into Mutual Cancellation

You should think about getting out of contract through mutual cancellation. In general, it is not beneficial for two parties without a good connection to maintain a commercial relationship. Therefore, you should approach the other party with a clear request for contract cancellation. There is a possibility that the other side will agree to cancel the contract, and your business will be clear of the agreement. Most business owners and other parties will not escalate the issue because they need to have a positive public image. However, if the other party is currently benefiting a lot from your contract, it is unlikely that this approach will work.

Check for Counterparty Breaches

You should look for breaches by the other party if mutual cancellation is not an option. This process involves combing through your unfavourable contract thoroughly until you find a legal breach which would be cause for termination of the agreement. Most commercial contracts are extremely complex and intricate, and they often set out the actions and omissions which would be cause for termination. If you have an experienced lawyer, they will help you find a trigger event to help you in escaping the contract. You should not use the information of a counterparty breach carelessly. Instead, you should strategize with your lawyer until you find a fool proof way to get out of contract without exposing your business to harm.

Discuss Fraud and Misinterpretation

You should consider your contract and determine whether the agreement can be considered fraudulent. Simply speaking, the formal contract might be invalid if you agreed to the deal with the counterparty due to fraud or a misinterpretation. It is not uncommon for people in the commercial world to oversell deals. If you signed the contract due to inaccurate representation of the agreement, you can extricate yourself by arguing fraud.

For more information, contact a local expert in commercial law.


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Probate Law: What You Need to Know

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