Getting Out of A Contract

Sherrie Bennett


So what if you want to get out of a contract? Some valid reasons for not fulfilling a contract - sometimes called "defenses" - include:

Duress is an overcoming of the will by force or other means. A contract made under duress isn't enforceable. An example would a person holding a gun to your head to get you to sign a contract.

Fraud and misrepresentation involve false statements about a present or past important fact that is relied on by a party to the contract. A fraud is a deliberate misstatement of a fact. In the case of a misrepresentation, the injured party can cancel the contract. An example would be if someone sold you a table they said was an antique, but it turned out to be a reproduction.

A defrauded party can cancel the contract and sue the wrongdoer for damages. A victim of fraud may also have other remedies under the law of consumer fraud.

Mistake occurs where one or both parties to the contract believe a fact to be true when it isn't true. If one party makes a mistake, the error is called a unilateral mistake. For example, if you sell somebody a table that you think is an ordinary table made in 1950 for a few dollars, and it turns out to be a valuable antique made in the year 1800, the law will not ordinarily invalidate that contract.

Generally, this type of mistake doesn't invalidate a contract, because the law doesn't excuse negligence or inadvertence. However, if the other party to the contract induced the mistake by leading you to believe it was a modern table instead of an antique, then you may cancel the contract.

If both parties to a contract make a mistake, the error is called a bilateral mistake. This type of mistake generally voids the contract because there was no "meeting of the minds" or consent.

Lack of what's called consideration, which can be money or property, or a promise of money or a promise to do or not to do something, can invalidate a contract. For this reason, a promise to make a gift is ordinarily not enforceable.

However, if another person acts in reliance on your promise to make a gift, the promise may become liable under principles of what's known as promissory estoppel or detrimental reliance. For example, if you promise to donate a million dollars to your college to build a library, and the college builds the library, you may be required to make the gift.

A Statute of Frauds requires certain kinds of contracts to be in writing to be enforceable. For example, in most states a lease of a year or longer must be in writing to be enforceable. However, a Statute of Frauds may not be a defense to an unwritten contract if one of the parties has relied on the contract to his or her detriment.

Impossibility of performance can terminate a contract if something unforeseen prevents the performance of the contract. For example, you contract with a famous painter to do your portrait and the famous painter dies. The obligation to paint your portrait cannot be completed. The contract to paint your portrait is terminated by impossibility of performance.

Rescission sometimes occurs when one or both parties has the right to cancel a contract under the terms of a contract. For example, an underage person can cancel a contract because he or she lacks competence to make a contract in the first place. Or the parties can together agree to terminate the contract.

Sherrie Bennett is the former director and staff attorney at the University of Washington Student Legal Services in Seattle.