Contracts are a way to enter into an agree so both sides get what they want. Sometimes, though, contracts can be broken because they don't meet certain legal requirements or other legitimate reasons.

Let's look at some ways contracts can be broken or ended legally.

The Contract is Impossible to Fulfill

When people do what the contract calls for, it's called performance. For example, you make a contract to perform at a concert. You appear and perform. The other party pays you. That's it. The contract is completed.

Sometimes though something happens making it impossible to do what's called for in the contract. This is called impossibility of performance. If it's impossible to do what the contract calls for, either party can break the contract. For example, you contract with a famous painter to do your portrait and the famous painter dies. A dead painter can't paint. The contract to paint your portrait is terminated by impossibility of performance.  

Fraud, Mistake, Misrepresentation

You may be able to break a contract if the other party does something improper. You can also break it if you and the other party both made the same mistake in making the contract. Breaking a contract for these reasons is called rescission.

Being tricked into making a contract by the other side is another reason you can rescind the contract. Fraud and misrepresentation are reasons allowing to you get out of a contract.

Sometimes a person can get out of a contract because the law says she's not of age or sound mind to make one in the first place. Say your 13-year-old child signs a contract to buy a used car. The contract isn't valid because minors (usually under 18 years old) aren't old enough to make them.

Or say your mom is elderly and lost the capacity to understand what she's doing. A contract she makes to buy a vacation property can be rescinded, because she wasn't mentally capable to understand its terms.

Breach of Contract

If the other side breaches your contract, you don't have to do your part. A breach happens if one side:

  • Refuses to do his part 
  • Does something he wasn't supposed to, or
  • Blocks you from doing what you're supposed to

Not all breaches of contract end up in court. A breach has to be serious, or "material," to mean anything.

  • You can sue someone who makes a material breach of your contract. A material breach goes to the heart of the contract. For example, you hire a violinist to perform at a concert. She shows up, but plays the accordion. You have to refund the ticket prices to angry fans. The violinist materially breached the contract. You would probably get a judgment against the violinist for the amount of money needed to put you in the same financial position as if the violinist had not breached the contract. 
  • An immaterial breach of contract is one that doesn't matter. Say you hire someone to inspect your heating system once a month. The contract says it should be inspected on the first Monday of the month. But the contractor comes on the first day of the month instead. In all likelihood this is not a breach, unless for some reason the inspections really had to be done on the first Monday, such as a court order.

Prior Agreement

Contracts can also be ended by prior agreement. The contract may say it can be ended by either party giving written notice to the other party. The contract would contain a provision about how it can be terminated and as long as those conditions are met, the contract is ended. Be sure to be specific, because interpreting unclear language could lead to a lawsuit.

You can't read every contract you come across, but for the most important ones - employment, living arrangements, even medical treatment, be sure to have an attorney review it before signing.   

Questions for Your Attorney

  • An orchard agreed to sell me a ton of Granny Smith apples. They said a fungus ruined them and delivered a ton of Golden Delicious instead. Must I take them?
  • I sold my car to a minor who showed me his older brother's ID. Now his dad is demanding I take back the car and refund the money. Must I do so?
  • My landlord wouldn't let me review the lease before signing it, but it is very unfavorable to me. How can I get out of it? 

Tagged as: Contracts, contract, breach, performance, rescission, termination, impossibility, notice, material, immaterial