Q: I signed a contract that I now regret. Do I have any options for getting out of it?
A: While the best time to determine whether an arrangement meets your needs is before you sign, sometimes changed circumstances or a change of mind create a need to terminate a contract.
Many contracts will include a termination provision that describes how and when you can terminate the contract. This provision may specify the circumstances, timeframe, and requirements that must be followed. Circumstances for termination that are often included in a contract are the other party’s breach, insolvency, or change in ownership, or the occurrence or non-occurrence of a specified event or condition. Sometimes a termination fee is required to compensate the other party for an early termination.
If the contract does not have an explicit termination provision, you may be able to negotiate a termination with the other party, particularly if you have an existing business relationship. Another option is to work with the other party to amend the contract to make changes to your respective obligations or assign the contract to a third party that is willing to assume your obligations. Any amendment or assignment should follow the requirements specified in the contract, which usually include the consent of the other party and a document signed by both parties.
New Hampshire law provides consumers with a right of cancellation within a specified timeframe (ranging from three to five business days) for a few types of contracts under very specific circumstances. This right of cancellation may apply to door-to-door sales or sales outside of a seller’s permanent place of business in an amount greater than $25.00 (which are also covered by federal law), prepaid health or martial arts club memberships, contracts with credit repair companies, and certain purchase and sale agreements for timeshares, condominiums, and subdivision lots. More information about these consumer protections is available on the website of the New Hampshire Attorney General’s Office.
There are also several established legal theories under which you may be excused from performance of a contract, but they require a more complex analysis to determine whether they might apply. Consultation with legal counsel can help you understand your rights and obligations under your existing agreement and decide on an appropriate course of action.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.