When can I get out of a contract?

One of the central points of Australian law is that individuals or companies should be able to make contracts with each other with confidence that the courts will help enforce those contracts if either party defaults or fails to perform as agreed.

As a result, there is no quick “get out of jail free” card when it comes to getting out of a contract that you may have signed or even verbally agreed to.  In fact, the whole idea behind signing a contract is to bind you to an obligation to do various things.

If you believe that you have grounds to get out of a contract you should seek legal advice from a lawyer before deciding to terminate the contract.  Preferably one who practices in litigation or dispute resolution law.  Simply ignoring the problem and hoping it will go away or attempting to “disappear” are strategies that rarely end well and are likely to improve the other parties legal position.

If you simply “walk away” from a contract, this may amount to a “repudiation” of the agreement.  When someone repudiates an agreement, the non-defaulting party may either force the defaulting party to comply with their contractual obligations (by way of court order) or terminate the contract and sue the defaulting party for the value of the loss that he / she has suffered as a result of the repudiation.

When can I get out of a contract?

Axia Litigation Lawyers can discuss with you the options that may be available to you to get out of a contract legally.  Here are some examples of reasons why you may be able to extricate yourself from an agreement:

  1. Options based on legislative requirements. The mandatory cooling off period in real estate is an example.  A failure to meet legislative requirements by the other party, may provide an avenue to get out of a contract.
  2. If the contract contains errors such that the contract is unenforceable. Sometimes a contract, whether in writing or verbal, is so poorly constructed that it simply can’t be legally enforced.
  3. If the contract specifically provides opportunities to terminate the contract.  Well prepared contracts often include clauses which provide legitimate circumstances under which one or both of the parties can terminate the contract.  These clauses can have very specific provisions about how termination can occur and on what grounds so you would be wise to seek some advice before attempting to rely on these terms.
  4. If a court finds that the term of a contract is unfair. This does not apply simply because you think you shouldn’t have to pay.  The court will look at a variety of factors and will only vary or void the contract for lack of fairness in specific circumstances.
  5. The Australian Consumer Law specifies some behaviour that is considered unfair when it comes to buying and selling goods and this may provide an opportunity to terminate a contract. These behaviours include sellers engaging in misleading and deceptive conduct, where one party is unfairly disadvantaged by the terms of the contract or where one party does something excessively unreasonable (referred to by lawyers as “unconscionable conduct”)

Again, just let me caution you that you should always seek advice before attempting to extricate yourself from a contract.  Terminating a contract cannot be undone and therefore it is important that it is done in the correct manner.  Unlawfully terminating a contract can result in additional penalties and/or in legal costs associated with defending your actions.