Key Takeaways

  • Contracts are legally binding but can sometimes be voided under specific conditions such as fraud, impossibility of performance, or breach.
  • A cooling-off period allows consumers to cancel certain contracts within a short timeframe.
  • Negotiation and mutual agreement between parties can often result in a contract termination without legal consequences.
  • Force majeure clauses may allow cancellation due to unforeseen circumstances like natural disasters or governmental actions.
  • Contracts can include termination clauses specifying valid reasons for ending the agreement.
  • Seeking legal advice is crucial when attempting to exit a contract to avoid unintended legal repercussions.

If you need to know how to get out of legally binding contracts, you need to know that there are legal ways to void contracts that you've signed. It just depends on how the contract was written. Because contracts are written or oral agreements, they are typically enforceable by law. There are some circumstances where you can break a contract. These include actions (or lack of actions) in fulfilling the commitment and any statutes intended to protect consumers.

Acceptable Reasons to Void A Contract

Contracts are legally binding by law. Although agreements can be oral or written, most arrangements are laid out in writing and signed by both parties. There are circumstances, though where a contract is invalid. For example, if a contract does not meet legal requirements, it is not enforceable.

  1. Impossibility of performance. When you are in a situation where it is impossible to fulfill contract terms, either party can nullify the contract.
    For example, you hire a party planner to organize your 50th birthday celebration, but she dies before she has finished the job. The contract is terminated because she cannot fulfill her duties.
  2. Contract fraud, mistakes, or misrepresentation. You could break a contract if the other party did something unethical or wrong, if you and the other party made the same mistake, or if the other party was dishonest.
    Example mutual mistake: You formed a contract to purchase a photo from a friend that was signed by Michael Jackson. You both find out the signature is not authentic. You are no longer legally required to follow through with the contract.
  3. Breach of contract. This happens when you are involved in a contract and the other party does not honor the agreement by refusing to do his or her part, doing something that is not part of the contract, or otherwise inhibiting you from fulfilling your part of the contract. Only material breaches are litigable. Material breaches violate the central part of the contract while an immaterial breach does not affect the contract fulfillment.
    For example, you hire a photographer to take a family portrait. Instead, the photographer decides to sketch a picture because his camera is in the shop. The photographer materially breached the contract because the heart of the contract is a family portrait. On the other hand, the photographer stated he would use a Canon camera in the contract. Instead, he shows up with a Nikon because his Canon is in the shop. This is an immaterial breach because it would not change the central part of the agreement, which is a family portrait.
  4. Prior agreement to end a contract. A contract that states the agreement can terminate early if both parties fulfill the heart of the agreement.
    For example, you enter a contractual agreement with a small business consultant whom you hired to finish your business plan in six months. The agreement also states that if the business consultant completes the project in less than six months and you approve it, then either party can terminate the contract with written notice.
  5. Unconscionable agreement. When a contract is grossly one-sided, you can break it. The law frowns upon deals where the power and benefits sit on one side of the agreement.
    For example, you rent an apartment and midway through the contract, the other party raises the contract by $300 a month and says you must pay or move out.
  6. Anticipatory breach or anticipatory repudiation. When the other party backs out or show signs of backing out, you may have enough reason to void the contract.
    For example, you are a life coach contracted to give client 12 coaching sessions over 12 weeks. After the fourth session, your client stops showing up, and you can no longer reach her.
  7. Completion of the contract. If you fulfill the agreements in the contract, then you can end the agreement.
    For example, you are hired to audit your client's documentation. You finish the terms of the agreement, but the client wants to extend the contract. You are not under no obligation to extend the contract.

There are also federal and local state consumer protection laws that look out in the consumer's best interest. Contracts are agreements that are intended to be equally beneficial to all involved parties. There are times when you need to break the agreement. Knowing contract laws will help you know whether you can lawfully nullify an agreement.

Cooling-Off Period and Rescission Rights

Many contracts allow for a "cooling-off" period, during which a party can cancel the contract without penalty. This period varies by jurisdiction and contract type but is common in transactions involving consumer goods, door-to-door sales, and real estate.

For example:

  • Federal Trade Commission’s Three-Day Rule: Allows consumers to cancel contracts for purchases over $25 made at home or outside a regular business location within three days.
  • State-Specific Consumer Protection Laws: Some states extend cancellation rights to gym memberships, timeshares, or auto sales.

To exercise rescission rights, consumers must notify the seller in writing within the specified timeframe.

Force Majeure and Unforeseen Circumstances

A force majeure clause in a contract allows parties to terminate the agreement when unforeseen events make performance impossible or impractical. Common force majeure events include:

  • Natural disasters (hurricanes, earthquakes, floods)
  • Government regulations or shutdowns
  • Pandemics or health emergencies
  • Labor strikes or supply chain disruptions

If your contract includes a force majeure clause, carefully review the language to determine whether the specific event qualifies and whether you must provide notice to the other party.

Mutual Rescission and Negotiated Termination

A force majeure clause in a contract allows parties to terminate the agreement when unforeseen events make performance impossible or impractical. Common force majeure events include:

  • Natural disasters (hurricanes, earthquakes, floods)
  • Government regulations or shutdowns
  • Pandemics or health emergencies
  • Labor strikes or supply chain disruptions

If your contract includes a force majeure clause, carefully review the language to determine whether the specific event qualifies and whether you must provide notice to the other party.

Mutual Rescission and Negotiated Termination

Contracts can often be terminated if both parties agree to end the agreement. This is known as mutual rescission, where both parties formally agree—typically in writing—to nullify their contractual obligations.

Negotiating a termination might involve:

  • Partial Performance: One party offers partial payment or fulfillment in exchange for release from further obligations.
  • Substituted Agreement: Replacing the original contract with a new agreement that better suits both parties.
  • Waiver of Rights: One party voluntarily relinquishes its rights under the contract to allow the other to exit without penalty.

When negotiating termination, it's best to document everything in writing to avoid potential disputes.

Termination Clauses and Exit Provisions

Some contracts include termination clauses that outline specific conditions under which the agreement can be ended. Common types of termination clauses include:

  • Termination for Convenience: Allows one or both parties to end the contract at any time with prior notice.
  • Termination for Cause: Allows a party to end the contract if the other party fails to meet agreed obligations.
  • Automatic Termination: Some contracts specify an end date or event that triggers contract expiration.

If you are looking for ways to get out of a contract, check for any existing termination provisions that may provide a legal way to exit.

Frequently Asked Questions 

1. Can I cancel a contract after signing it?Yes, depending on the contract type and applicable laws. Some agreements include a cooling-off period, and others may allow rescission under specific circumstances like fraud or misrepresentation.

2. What happens if I break a contract without a valid reason?Breaking a contract without legal justification may result in financial penalties, lawsuits, or damage to your reputation. Always consult an attorney before attempting to exit a contract.

3. Does a verbal agreement count as a contract?Yes, verbal agreements can be legally binding, but proving their terms in court can be challenging. Some contracts, like real estate transactions, must be in writing to be enforceable.

4. What is a force majeure clause?A force majeure clause allows contract termination due to unforeseen and uncontrollable events such as natural disasters, government actions, or pandemics.

5. How can an attorney help me get out of a contract?An attorney can review your contract, identify legal exit options, negotiate with the other party, and help minimize financial or legal risks associated with terminating the agreement.

If you need help with contract agreements, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.