Person signing a commercial contract
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Commercial contracts bind two or more parties to the terms of the agreement. However, for a variety of reasons, parties sometimes seek to terminate such contracts early. A party who terminates a commercial contract early often faces penalties. However, depending on the situation, it may be possible to terminate a commercial contract legally and without penalties. In this article, we discuss how to terminate commercial contracts without triggering penalties. 

Exercise an Early Termination Provision

If you are a party to a commercial contract that you’d like to get out of, you should first review the terms of the agreement. Some contracts include an early termination provision. If your contract contains such a provision, you should review the conditions specified under the provision. Typically, these types of clauses require the terminating party to give a certain amount of notice, and they sometimes require the payment of a termination fee. However, not every contract contains an early termination clause. In addition, in some cases, exercising an existing early termination provision may not be the most cost-effective way to terminate a contract. 

Review Legal Justifications to Terminate Contract Early

If your contract doesn’t contain an early termination provision, or if it contains one that is not cost-effective, then legal justifications may exist that allow for the early termination of the contract without triggering penalties. For example, if the contract is fraudulent or you were induced to enter it by mistake, under duress, or through undue influence, then you may be permitted to terminate it early without penalties. In addition, if the contract is overly one-sided or unfair to you, then you may be able to terminate it on the basis of unconscionability. Further, you may be entitled to terminate a commercial contract if it violates public policy or involves illegal activities. Finally, you may terminate a commercial contract based on commercial impossibility or impracticability if there is a legally justifiable reason that you can’t comply with its terms.

Negotiate an Exit with the Other Party 

If the contract contains no means of termination without penalties, the best option is often to negotiate with the other party. Making a good-faith effort to negotiate with the other party is often a better option than simply refusing to comply with the terms of the agreement. However, negotiations can be challenging, particularly if the other party is represented by an attorney. Therefore, it’s important to obtain the services of an experienced attorney prior to entering contract negotiations.  

Contact a Florida Corporate and Business Law Attorney 

If you need assistance with your corporate or business legal needs, the law firm of Gueronniere, P.A., is here for you. When you come to us for assistance with contracting or another business matter, experienced corporate and business law attorney Grace de la Gueronniere will review the facts of your case and formulate an effective legal strategy to address your situation. Please contact us as soon as possible to arrange an initial confidential meeting with our experienced Florida lawyer.