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How to Terminate a Contract

How to Terminate a Contract

People are involved in variegating businesses from collection garbage to selling 100 karat diamonds. Some of them risky businesses in terms of what If person A pays for the something he is interested to buy but other party refuses to perform for any back hand circumstances. Of course this is not fair for the party who just paid up for his desired thing. This can happen other way around, if you asked this builder to construct your house but then you later refuse to pay him. Here we need a binding force which will be enforcing both these parties to perfume their duties as they had once promised to each other. To avoid situations like these, people tend to make contracts with other parties, so their transaction or business run smoothly sans any difficulty.

Contract is legal binding which involves a promise or set of promises that each party will perform respectively. Person who makes promise is termed as “Promisor” and the one to whom promise is made is termed as “Promisee”. Since this is legal binding, if in any case other party refuses or fail to perform their promise. Promisee can sue the promisor, then court will enforce him as per the demand of the situation and Contract Law. Addendum to that promisee can also claim for recover of costs that incurred because of failure to perform the task, special damages—when a person feels the burnout and depression because of refusal or unfollowing of the promise, and suit. There are some stipulations of contract if they are not followed properly, then contract loses the power of enforceability. Contract becomes void. Essentials of contract are clear-cut. First of all, it requires the “Mutual Agreement”, that both parties are willing to make contract with each other. Then there is second essential of contract; “Offer and Acceptance”. Person A has to offer to do something or abstain from doing something. Person B—as an offeree—will accept it. Offerees can accept the via mail, text, call or personally by voice. Once the words are uttered or mail is sent from the house. Offer is accepted even though it has not yet the offeror. This is basics for making the agreement. Nonetheless the third essential is “Competent Party”. They should be able to perform their job. They must not be insane, minor (except for some cases), and must not have any kind of restrictions of making contracts from the court. Forth essential is “Lawful Consideration”. Consideration means something in return. It must be of lawful things if there is unlawful thing involved, contract will be void effectively and immediately. Ordinarily money is used in exchange of real estate properties, products, services, or any kind of protection. But money can be replaced by anything but legal to the law of country. Then the fifth essential is “Legal Relationship”. The contract must be of legal nature rather than of social nature. A father promising his son to buy him latest model of any mobile phone and then later on he turns his eye from his words does mean his son can sue him in the court. Social contracts are not the contracts that can be enforced by the Contract Law. Notwithstanding sixth essential about the contracts is that the contracts should be of “Written nature and must be Registered. This provides the convenience to parties to prove the court regarding to their verdict. But that doesn’t mean proved verbal contracts are invalid for the court. So contract should be written, signed, and attested by the witness and registered for court proceeding if needed in any kind of urgency or situation. Seventh essential of contract is the “Possibility of Performance” that is parties should consider their performance capabilities and must not promise to perform those tasks and put such events or condition of performance where certainty of performance does not seem sure. Person A will make person B house of his desired when lake city have rain of diamonds. This is not contract since event prescribed here lacks the surety of if it is going to happen or not. Simply impossible even make the contract void. And these kind of agreements can not be enforced by the law. However, the eighth essential of the contract describes the “Certainty” of the contract. Contract should be meaningful so that parties could comprehend it as it should be. Providing vague statements and unmeaningful elucidations—which can not be made certain makes the contract void as per the contract law. Thus the terms and conditions scribbled in the contract should be clear and meaningful. Person A agreeing on selling the one hundred tons of oil from the person B, is not the contract since it lacks the clarity that which kind of oil is being sold here. Ninth essential of contract is “Not expressly declared void”. Agreement should not be of those nature that are strictly declared as void by the act. Agreement in restraint of trade or the agreement by the wager are expressly declared void by the act. So if person A provides 10 million dollars to person B to close his business, this does not make this agreement as a contract since It is restraining the person from doing the trade. Last essential of the contract is “Free Consent”. Parties agreeing on the contract must agree on the terms and conditions of the contract with their will and consent. Contract made at the gunpoint are not the contract since here free will was not involved by the party that accepted the contract. If these all things are considered then both of these parties could rivet the sections of the contract law when needed. But since this is not the perpetuity kind of thing, it can be terminated so both of these parties could roam free away from this legal binding.

There are two kind of contracts. One is unilateral contract—where promisor provides the open contract for all to perform. Second one is bilateral contract where promisor and promisee knowingly get into the agreement. When a bilateral contract like sales of goods, credit, lease or provision of services, promisee performs for the sake of the performance of the promisor. But if the promisee does not want to perform for the promisor amidst of contract. Contract can be terminated. Then the both of these parties are not liable to perform for each other. They will be free from contractual chains. This requires the balance of interest between the promisor and promisee. It is legitimate right of promisee that if the promisor is unable or refuses to perform, or has gone bankrupt, he can terminate the contract as soon as possible. There are variegating methods for the termination of contracts.

Methods of Terminating Contract

When contracts are made, in their terms and conditions certain ways are mentioned for the termination of contract. These stipulations determine in what conditions contract can be terminated and what will be the consequence if one goes for it. Sometimes penalty accompanies the termination of the contract, and sometimes anyone can not just terminate the contract. Special contracts are even overlooked by the court, thus even court orders the promisor to perform his or her part. Down below are the few methods through which contract can be terminated.

Termination by Default

When a vendor fails to provide the desired products to the promisee, then the contract is terminated effectively and immediately. This is generally used by the customers. This type of termination can be totally depended on the how it was worded. Sometimes contract gets terminated because of late delivery or it was not delivered at all. Apart from that it can terminated over the lesser quality of the product as per claimed during the contract. This termination just can not happen without customer showing up with the proof of that the promisor was not successful to perform. However if there is disagreement between the promisor and promisee then they can take their case to mediator.

Termination by Mutual Consent

Sometimes people also cancel their contract with mutual agreement so that future contingencies of triggering causes could be avoided. Sometimes product line manufacturing is closed. So all the contract liked with the these products are terminated with mutual consent since the company is unable to provide now. Same goes for the customer if he does not get the product which was part of the contract then he can terminate the contract as per their mutual consent.

Termination by Convenience

People tend to terminate their contracts when they feel like they do not money or they just do not want the product now for their convenience. This can be done only it does not incur any costs to the promisor or vender. Sometimes there are some events that make the contract impossible to perform like natural disaster or war, even then contract can be terminated for the sake of convenience. As these are events beyond the parties’ control or force majeure. Apart from that if there is fixed time of performance mentioned in terms and condition, then contracts terminates when the times comes.

Impossibility to Perform

Typical contract always demands the certain performance as per the negotiation. As a Painter was asked to sketch this little girl a good sketch. He sketch the girl. This is called performance. But if there are certain events triggered that makes the promisor impossible to perform. Contract gets terminated by the “impossibility of perform”. Painter is not liable to pant the sketch if he gets blinded just after the couple of days he signed to sketch his beautiful neighbor. It is clearly impossible for him to sketch her without eyes. Sometimes this impossibility to perform is also termed as “frustration”.

Termination by prior Agreement

A person can terminate the contract as per stated conditions, agreed and stated in terms and conditions part, of the contract. This usual provision of contract is termed as “Break Clause”. It is necessary for to agreement to clearly state the situations where this provision can be used. Addendum to that it must be scribbled there that what kind of actions must be taken before going for the this provision. Ordinarily written notice and sometimes phone call is asked as to-do task before riveting the break clause. Thus, the contract gets terminated.

Rescission of Contract

When one of party in the contract provides the misrepresenting , made a mistake, acted illegally, or has been fraudulent from the inception of the contract, the contract gets terminated. Suppose person A is selling his farm house to person B. But upon inspection it was clear to person that the farm house was illegal property of twin brothers that are now dwelling the slumps. This person B has power to rescind the contract. This provision is also benefitted when a person of old age makes a contract with you Then you realized that old person incapable of making his or her own decision so this contract can rescinded.

Breach of the Contract

A person deliberately refuses to perform his part of the contract or the person does not honor the contract—its termed as breach of contract and thus contract gets terminated. This happens when one party did not completed his obligations at all or did not performed obligations fully. In some breach of contracts there might be the possibility of some costs may incur or had incurred. This is termed as material breach of contract. These costs can be recovered by the suit “recovery of damages” and suit for the quantum merit. This injured party has all the rights to claim the damages, even the psychological one too in case of special damages.

Termination by Completion

As mentioned above the contract comprises of obligations that must be performed by the both parties. Once these obligations are fulfilled by each party. The contract gets terminated over the completion of tasks which were under the binding force of the contract. After contractors are no more bound to the contract. To avoid further disputes, documents are necessary to keep. Apart from that, all the aspects of contract gets completed here. Thus contract terminates.

Free Initial Consultation with a Contract Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506