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Getting Out of a Contract

Posted by Chris Peterson | Jun 08, 2015 | 0 Comments

Getting Out of a Contract

Getting Out of a Contract

Because a contract is a legally binding instrument, by design you aren't allowed to simply walk away from one without penalty. However, there are exceptions to this, but it is in your best interests to work with a College Station  business lawyer if you decide to break a contract.

The Three-Day Rule

Many people are under the assumption that they have a blanket right to cancel any contract within three days of signing, simply because they change their minds. This so-called “cooling off period” only applies in limited ways in Texas. In essence, you may be able to cancel a contract that was made at a location other than the seller's normal place of business. Examples of such places are merchant shows and door-to-door sales.

Texas' three-day rule does not apply to all transactions, however. Some exclusions are:

  • A real estate purchase of under $100
  • A sale brokered by an attorney
  • Purchase of farm equipment
  • Purchase of insurance
  • Sales that by their nature must be made through the mail or phone
  • A sale that has been negotiated beforehand at the merchant's establishment

Ways to Get Out of a Contract

Disregarding the three-day rule, there are ways to back out of a contract in some situations. If you are given an indication that the other party is not going to live up to his end of the agreement, for instance, you may be able to cancel the contract through what is termed “anticipatory repudiation.” Similarly, if the other party in some degree backs out of an agreement, such as selling a piece of equipment to another party that was included in the contract, you can consider this a material breach of contract.

Another situation where you may be able to back out of a contract is when some form of fraud occurs. For instance, if you contract with a company to landscape your property, including using a specified high grade sprinkler system, and the company instead uses a very low quality sprinkler that does not hold up under the strain of water pressure, you have grounds for claiming the contract void due to fraud.

Finally, you may be able to get out of a contract if it is clearly and grossly unfair to one party. For example, suppose you live in a region where no cable television is available, and your only option is disc television. If the company demands an exorbitant rate with no option to negotiate a price that is fairer, you may have grounds for breaking the contract.

Make Sure to Consult an Attorney

Anytime you consider breaking a contract it is very important that you consult with a College Station  business lawyer. Call Peterson Law Group today to arrange a consultation at 979-703-7014 or 936-337-4681.

About the Author

Chris Peterson

Chris Peterson is the owner of Peterson Law Group. He practices primarily in the areas of wills, trusts and estate planning; probate and trust administration; elder law; and business law. Chris is also the owner of Brazos 1031 Exchange Company.


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