Whether it's for you personally or a relationship for your business, it's common that you're going to run across contracts on an almost daily basis. Many times, you don't end up paying attention to what the contracts say. Think of all those Terms and Conditions that you "sign" for websites you visit or other apps that you use - do you really read all of the provisions? Don't be ashamed if you don't, most people don't. But if there's a problem under the contract, that's when you can find out what all that language really says and what it means for how you need to resolve any disagreements.
If you have signed a contract that you want to terminate, the first thing you'll need to do is look to the actual terms of the contract to figure out how (and if) you can terminate the contract. Even though you may have buyer's remorse, that may not be enough to allow you to terminate a contract. However, in Minnesota, there are certain types of contracts that are required to provide you with a cooling-off period when you can rescind your agreement to the contract.
Ways to Terminate a Contract
There are a variety of ways that you can terminate a contract. Whichever method you choose, it's important to start with the correct method as specified in the contract. Here are some common methods of terminating a contract:
- Breach of Contract ~ when one of the parties to a contract doesn't fulfill their obligations, it may be a basis for terminating the contract. But before you immediately turn to a breach of contract theory, you need to examine the extent of the breach. Was it vital to the contract? If it was something that was vital, then a court can find that the contract should be terminated and you may be entitled to damages from the other party. Issues like late payments or delays aren't normally considered serious enough to terminate a contract.
- Conclusion of the Contract ~ contracts will automatically terminate when all of the requirements for performance by all the parties have been performed. So if you've done everything you've agreed to do and the other party has done what they agreed to do, your contract will be concluded. But before you assume that it's all done, you want to make sure that your contract does not include any renewal clauses that may have been triggered throughout the course of the contract.
- Agreement to End the Contract ~ if you are frustrated with the contract, there's a chance that the other party is frustrated as well. In these situations, it may make sense for both parties to agree to end the contract and go their separate ways. Or, it may make sense to end the contract and enter into a new one that is more beneficial to everyone involved.
- Force Majeure ~ if something happens that makes it impossible for one (or more) of the parties to the contract to perform under the contract, then the contract may be terminated. In these types of circumstances, it's important to look at whether the parties have a force majeure clause in the contract that addresses what is to happen when an event makes it impossible to perform under the contract. In the past, these events included things like natural disasters, "Acts of God" and terrorist activities. The past couple of years have inspired us to add pandemics to our contracts as well.
Before you immediately decide to choose one of these methods, it's a good idea to speak to an attorney to review the facts of what you've been dealing with and to help you determine if you have good cause to terminate your contract.
Minnesota Contracts with "Cooling-Off" Periods
As I mentioned earlier, if you're in Minnesota, there are certain types of contracts that provide for a 3-day "cooling-off" period after you sign them. During this period, you are able to cancel the contract, but there are only certain types of contracts that qualify:
- Home Solicitation Sales
- Life Insurance Policies
- Hearing Aids
- Extended Car Warranties
- Military Personnel
- Debt Management and Debt Settlement Services Contracts
- Foreclosure Consultant Contracts
- Credit Services Contracts
- Membership Travel Contracts
- Health Clubs, Social Referral Clubs, and Buying Clubs
- Reverse Mortgages
- Residential Roofing and Siding Contracts
- Agricultural Contracts
Because these are special types of contracts that qualify, the State of Minnesota has a good page that explains these various contracts. While many people wish this cooling-off period was available in all contracts, Minnesota has specified specific categories for it to apply to.
If you're concerned about your Minnesota contract and whether you are in a position to terminate it or not, let's set up a Legal Strategy Session to discuss your current situation and some next steps to help you move forward.