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Can I cancel my contract?

On Behalf of | Jun 5, 2023 | Contract Disputes

Good contracts are what keep your business running and thriving. However, running a business can be unpredictable, and you may find yourself in a situation where you want to cancel a contract you are in. Can you do that?

As with many legal questions, the answer is “it depends.” California law states that you can rescind, or cancel, a contract, but only under specific circumstances.

Does the other party agree to cancel?

The easiest way to cancel a contract is to ask the other party if they agree to the rescission. If both parties mutually consent, the contract can be cancelled.

As you can imagine, it is not always that easy. You must then examine the reason you want to cancel the contract.

You generally cannot cancel a contract because it has become too hard or inconvenient for you to fulfill your obligations under it. The other party could then claim you are in breach of contract.

Consideration and what it means

Contracts require consideration to be valid. Consideration means you and the other party both promise to do something of value.

A common example is a transaction at a store, which could be deemed a contract. You pay the store and in exchange for your payment, you receive an item. The payment and giving of the item constitute consideration.

A contract can potentially be rescinded if you cannot provide your consideration due to the fault of the other party. In the above example, if the store is out of the item you want, you are relieved from paying them.

Consideration could also become void or fail due to causes outside of you or the other party’s control. If the store you are buying the item from burns down before you can buy it, neither of you can complete the transaction.

Additional reasons for rescission

Other reasons a contract could be rescinded include if the contract is unlawful, prejudicial to the public interest or if you only agreed to the contract because you were threatened or lied to about its terms.

In that case, you could argue duress or undue influence as a reason to get out of the contract.

There is usually no easy answer as to if you can get out of a contract. Seeking advice on your situation is best.