When entering into a contract (like with any relationship), no one expects it to go pear shaped and end in tears. So, what happens when the awkward silences and name calling are all too much and it’s time to cut your losses and get out?
Terminating a contract is pretty straightforward when your contract has clear termination provisions. But we get it, there are times when in the heat of the moment no contract was signed, or perhaps what you did sign was pretty basic and had no termination clauses. Stop stressing; all hope is not lost. Here are a couple of options:
Option 1: Breach
First thing to work out is if there has been a breach of the contract by the other side. If so, then we may have just solved your problem. In order to terminate for this reason, the breach must be of an essential term (which is a really important one, e.g. to pay the fees) or be a sufficiently serious breach of a non essential term (which is a less important term, e.g. to deliver the goods by a certain time). This is actually a pretty tricky distinction to determine, and shouldn’t be made by your mate who thinks watching The Good Wife religiously is as good as getting a degree in law.
Option 2: Notice
If there hasn’t been a breach, how about you do it maturely and tell the other side that it’s over. A post–it-note à la Berger to Carrie won’t cut it. Terminating a contract without reason where there is no fixed term or any rights to terminate is a tricky one, and the Courts have said that you need to give a reasonable period of notice. What is a reasonable period will depend on a number of factors including:
- any hints in the agreement as to how long the relationship would last;
- time periods to provide whatever it is you agreed to provide (a cruise ship takes longer to build than a macramé hammock);
- any prior contracts between you;
- industry standards; and
- any investments made by the parties on the assumption that the contract will remain in place.