What is the Legal Remedy for Getting Out of a Formal Business Contract?

People lock into legal business contracts all the time. For most, everything goes according to plan. However, there are different reasons why some people need to get out of a contract, which can be quite tricky. After all, the contract serves as a formal and legal agreement between two individuals or entities. Backing out the wrong way would likely lead to a breach of contract lawsuit, which could prove costly.

Under the business contract, both parties agree to fulfil a specific legal obligation as specified. If one or both parties fail to follow through on what they agreed to, the wronged individual or entity can file a lawsuit. If the court finds the defendant liable, there is an excellent chance of the plaintiff receiving an in-favor judgment.

Fortunately, there are remedies for getting out of a legal business contract without the fear of a lawsuit. Following are some examples:

  • Termination Clause – Before signing any contract, you need to go over every word to make sure you understand the possible ramifications if something goes wrong. In fact, it is worth hiring an attorney who specializes in business contracts to review any formal documents on your behalf. Make sure the contract includes a “termination clause,” which means that, under certain circumstances, you can back out without paying a penalty or meeting specific obligations.
  • Cannot Perform – If you are no longer able to perform your obligations as outlined in the contract, it is possible to back out without having the other party sue. For example, if you develop a life-threatening illness or suffer a traumatic injury with either stopping you from following through on your responsibilities, then you can go through an attorney to void the business contract.
  • Other Party Breach – If the other individual or entity breaches the contract, then you too can get out of it. At that point, you have legal grounds to consider the contract “null and void.” If you have viable reasons for wanting to back out, you can always check the contract’s terminology to see if the other party breached in some way. Otherwise, you would need to wait for some type of fraud or misrepresentation of facts on the other person or entity’s side.
  • Negotiations – Depending on your current relationship with the other individual or entity, negotiations may be a possibility. The goal is to come to a reasonable agreement witnessed by a qualified attorney. If there are tensions between you and the other party, you could possibly use a mediator to help both parties come to an agreement on ending the contract.

If you and another party want to form a business contract, make sure that you have the document created and reviewed by an attorney. That ensures the contract includes the right legal verbiage from the beginning.

With an already executed business contract, never make an agreement to end the contract without the assistance of a qualified attorney. After all, people will often say anything to get what they want only to take a different action later. With contracts, you need to protect yourself. The best way to accomplish that is by using the services of a reputable attorney, thereby, avoiding a breach of contract and a possible lawsuit.

Posted on:
July 19th, 2018

Category:
Corporate Law