How to Get Out of a Contract
When most people sign a contract, they expect that all of the parties to the agreement will be held to the terms of the contract. And in many instances, it is very difficult to avoid performing under a contract. However, not all contracts are created equal, and some contracts are easier to avoid than others. All told, there are a number of strategies that attorneys can use when getting out of a contract signed by their clients.
Contract Defenses
One of the best strategies for getting out of a contract is by arguing one of a variety of contract defenses. Although different states have varying laws, individuals can typically argue fraud, duress, undue influence, and a number of other defenses in order to avoid having the terms of contracts enforced against them. Fraud generally requires intentional misrepresentation of material fact that a party relies on to their detriment. Duress usually involves an element of economic compulsion or other reason that goes to the very heart of the consensual nature of a contract. Undue influence involves pressure of parties in forcing individuals to enter certain types of contracts. If one of these or other defenses are argued, courts may avoid enforcing an agreement, and these defenses are the main ways of getting out of a contract.
Unconscionability
Unconscionability is another major way of getting out of a contract. Unconscionable contracts are agreements that are so unfair that it would shock the conscious to enforce them. This typically requires parties to show either procedural or substantive unconscionability. Procedural unconscionability involves how the contract was formed, and looks to the bargaining position and procedures used to negotiate a contract. Substantive unconscionability involves the particular terms of the contract, and will be found if the terms of the contract are so one-sided, it would shock the conscious to enforce the agreement. Oftentimes, unconscionability will come into play when courts assess a “contract of adhesion,” which is a standardized, printed, form contract that parties do not have a meaningful opportunity to negotiate. In any case, if it would be unfair to enforce the terms of an agreement, unconscionability can be another way of getting out of a contract.
No Consideration
A valid contract requires that there be an offer, acceptance, and consideration. Consideration is some kind of benefit of the bargain that both parties to a contract receive for exchanging promises to one another. Normally, consideration is money or services, but consideration can also be forgoing a legal right, cancelling debt, and a variety of other benefits.
Sometimes contracts do not contain sufficient consideration to make the contract enforceable. For instance, consideration cannot comprise the performance of an obligation that the party is already legally required to perform. In addition, promises to pay alone are usually not sufficient to constitute consideration. It is not always evident if there is a consideration issue with a contract, and as a result, it usually pays to speak with an experienced contracts attorney when getting out of a contract for lack of consideration.
Some Contracts Need to Be in Writing
Most people recognize that some contracts need to be in writing. Although the contracts that must be in writing vary from state to state, typically contracts for the sale of goods over $500, contracts involving land, contracts that cannot be performed within a year, contracts in consideration of marriage, contracts made by executors of an estate, and contracts by guarantors must be in writing to be enforceable. There are exceptions to these rules, and sometimes, performing under a contract despite these situations can make a contract enforceable. In addition, the writing requirement is usually flexible, so an email, text, or another writing could be sufficient to make one of these types of contracts enforceable. Nevertheless, the requirement that some contracts need to be in writing is another way of getting out of a contract.
Unclear Contract Terms
One of the most common ways of getting out of a contract is due to ambiguous terms. Oftentimes when people draft contracts without attorneys, they do not take time to define key terms in the agreement. If terms are ambiguous, courts may take into consideration the circumstances surrounding negotiation and execution of a contract. For instance, if the terms of a contract are unclear, courts may review emails, texts, and other evidence to see what the parties to an agreement were thinking when they included terms in an agreement. Sometimes, lawyers may even want to leave some terms in a contract ambiguous on purpose, so that if there is a dispute regarding that agreement, the attorney can make an argument that is favorable to their client. Although unclear contract terms will not cancel a contract completely, they can be used when getting out of a contract, since ambiguous terms may make it more difficult for parties to enforce certain provisions in a contract.
Although parties to a contract may think that they are stuck to the terms of an agreement, there are ways of getting out of a contract. Sometimes, parties can argue a variety of contract defenses, and other times, parties can argue that terms of an agreement are ambiguous and cannot be enforced against another party. The Rothman Law Firm has much experience negotiating contracts and helping clients getting out of a contract. If you are looking for an experienced New Jersey and New York contracts attorney, please feel free to contract The Rothman Law Firm to request a free legal consultation.