Termination of Contract

Termination of Contract

Termination of contract simply means one party or their lawyer puts an end to the contract before the parties have fully performed their obligations under the contract. Upon termination of a contract, the parties are discharged from further performance under the contract, but the termination does not affect the parties’ liability for any breach of contract that occurred before the contract was terminated, so you should contact a breach of contract lawyer upon any termination. Termination of contract can occur in a number of different ways and for a number of different reasons. There are two basic types of termination of contract: termination of contract for cause and termination of contract for convenience. Termination for cause originates from a breach of the contract itself or some other legal basis, whereas a termination for convenience is expressly permitted by the contract and typically does not constitute a breach of contract.

Some examples of termination of contract for cause include:

Breach of Contract – If one party commits a material breach of contract, the other party or their lawyer may properly terminate the contract and pursue the appropriate remedy. Note that a non-material breach of contract does not give the non-breaching party or their lawyer the right to terminate the contract.

Impossibility – if it becomes impossible for one party to perform the contract, it may be terminated. For example, a band has a contract to play a show on a specific day in a specific theatre. The day before the show starts, a tornado destroys the theatre, rendering performance impossible.  In that scenario, an Orlando breach of contract lawyer would effectively raise the defense of impossibility of performance.

Fraud or misrepresentation: If one party tricks the other into signing the contract, or intentionally hides or omits important facts that should have been disclosed, the contract may be terminated, or the lawyer may sue for such misrepresentation. For example, the buyer of a home finds out that the seller intentionally hid the fact that the roof was made of rotten wood that leaked like a sieve when it rained.

Mistake of fact – A mistake of fact occurs when one or both of the parties signed the contract thinking that things were other than they actually were. For example, the parties sign a contract regarding the sale of a book signed by the famous author. It turns out later that the signature is a fake and neither party knew. This mutual mistake of fact would allow the buyer or their lawyer to terminate the contract.

Termination for Convenience:

A termination for convenience occurs when the parties’ contract specifically allows termination upon the occurrence of certain pre-determined events. For example, in a construction contract, the owner or their lawyer is permitted to terminate the contractor’s right to build a road if it turns out to be more expensive than the owner planned on.

In general, before the contract is actually terminated, you should consult with your Orlando breach of contract attorney, who will send the other party a Notice of Termination, which formally notifies the other party or their lawyer that the contract is being terminated and the reasons supporting the termination. After termination for cause, the non-breaching party’s lawyer may sue to recover breach of contract damages, which may be money damages or an equitable remedy, depending on the type of contract at issue.

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