Contract Law: How Can You Get Out of a Contract?

Black pen on the signature line of a contract
  • James Notaris

    CPA, ESQ. Legal Editor

  • Steve Longo

    Executive Editor

    In Brief:

  • It can be possible to break a contract, though this has implications in many cases. 

  • Contract law in the U.S. allows signers to get out of contracts in various ways. 

  • Learn more about how to get out of a contract here!

Contracts are binding legal documents, but that doesn’t mean that they’re etched in stone. Signing parties are able to get out of contracts in a number of ways. While breaking a contract in certain ways, such as breach of contract, may have consequences, there are legal ways to get out of a contract effectively.

So, How Can You Get Out of a Contract?

Getting out of a contract can be done in some of the following ways:

Termination Clauses

Many contracts contain a clause that allows a party to terminate it early with few or no consequences. Though a party may have to meet certain obligations or pay a fee, termination clauses usually let a party get out of a contract without incurring legal action.

Breach of Contract

A party can willingly breach a contract, but this will almost always incur legal consequences. However, if the other party breaks the contract by not fulfilling their obligations, the victim party may have grounds to end the contract.

Negotiations

Sometimes, parties that are unhappy in an agreement can negotiate to either modify or end the contract completely. This is usually done either with in-person meetings or by written communication. 

Prior Agreement

Similarly, a contract may be ended by prior agreement, meaning it can be terminated by written notice as long as certain conditions have been met. 

Cannot Perform Obligations

If one party cannot perform their contractual obligations under any circumstances, they could be able to get out of their contract without any legal repercussions. “Impossibility of performance” through injury or other unforeseen circumstances, specifically, could be grounds for this. The incapacitation or death of an important person in a contract may make the contract cancellable too. In addition, natural disasters and other unfortunate events may mean the contract can be terminated.

“Cooling Off” Rule

The Federal Trade Commission (FTC) implemented a “cooling off” rule on purchases over $25. Under this rule, the buyer can cancel purchases made outside of the seller’s general place of business within a time period of 72 hours of the deal being made.

Contract Found Unenforceable by Court

Finally, a contract may be found unenforceable in a court of law under certain conditions. Some of these include lack of capacity by a signing party, fraud or misrepresentation, duress or undue influence, mistakes in a contract, if the contract was found to be illegal in nature, the failure to put a contract in writing if its legally required to be, and unconscionability if the contract is so unequal and unfair towards one signing party.

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