How to Terminate a Contract Prior to Start

Under normal circumstances, a contract is terminated when its stated conditions have been satisfied. In other words, most parties conclude their contract relationship by performing the obligations under which the contract was created. Sometimes situations arise that prevent a party from meeting the obligations stated in the contract, and it becomes necessary to terminate the contract. These steps will assist you in terminating a contract prior to start.

Instructions

Difficulty: Moderate

How to Terminate a Contract

1. Review the contract in its entirety. There may be a section already devoted to contract termination before all performance conditions have been met. If such a section exists, it will advise you on how to terminate the contract while remaining within the parameters set by it.
2. Explore any rescission clauses in the contract. Often a contract will stipulate that one party has the exclusive right to rescind the contract. If this is you, then you have the legal right to terminate your contract without obligation. If it is the other party that has the right to rescind, you may be able to persuade them to do so.
3. Contact the other party of the contract and inform them, unofficially, of your decision to terminate the contract. Provide information regarding the need to terminate and make sure it justifies your decision. If the other party supports your decision, then together contracted parties can agree to terminate the contract and move forward in the official process.
4. Send the other contract party an official notice of the termination of the contract. Send this official notice in written form and attach supporting documentation if necessary. This step can follow the unofficial notice of termination and relevant discussion or it can be the first step: terms of a contract often specify that contract termination be initiated by official notice.
5. Terminate the contract based on impossibility of performance. Indicate that an unexpected contingency prevents you from performing your obligations of a contract. For example, the death of a relevant party to the contract may prevent the work from being performed: this is an example of impossibility of performance.
6. Breach the contract when all other attempts to terminate it have failed. Breach the contract by refusing to perform the work specified in the contract, or breach the contract by doing something the contract specifically prohibits.

Tips & Warnings

• Always explore the terms of your contract before deciding to terminate. It may be more trouble than it is worth.
• Conduct a cost-benefit analysis of contract termination. This will help you to decide what method of termination, if any, will be the best for your situation.
• Consult an attorney about your contract obligations before making any decision to terminate it.
• Do not breach your contract unless it is your last and only option available for terminating a contract. Material breaches of contract can prompt an injured party to pursue damages, especially if they suffered an economic loss due to your breach of contract.

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