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Contract issues: Terminating business contracts in Houston

We have previously discussed avoiding contract disputes in Houston. In some cases, however, a dispute may be unavoidable and businesses may want to terminate a contract. At The Jackson Law Firm, we are often asked if it is possible to end a contract before the term or work is completed. In this post then, we will discuss how business contracts may be terminated.

In most cases, contracts require one or both sides to do something. For example, a business may outsource the production of a product to another company. The business will have a contract with the other company that stipulates what is being made, how many items are being made and the cost of production. As such, fulfilling the specified obligations is perhaps the easiest, and least contentious, way to terminate a contract. Once the terms have been met, the contract often ends without dispute.

If one side is unable to fulfill its commitments under the contract, it is known as impossibility of performance. For example, a company hires a performer for an event. Following an injury, however, the performer is unable to put on the show as planned. This may qualify as impossibility of performance. In these cases, the company is permitted to terminate the contract, according to the Houston Chronicle.

There are situations in which people or businesses may misrepresent themselves prior to entering into a contract, or act illegally with regards to signing the contract or their performance. For example, a restaurant hires a chef who claims to have certain experience and qualifications and signs a contract with him or her. If later, it is revealed that the chef was not truthful, this could allow for the contract to be terminated. This is known as the rescission of a contract.

Some contracts include termination clauses. These clauses often specify steps that either side must take in order to get out of the contract. This typically includes providing notice in writing of the desire to terminate within a certain period of time. In some cases, there may be penalties, such as early termination fees, which may be assessed. Termination clauses are common in automatically renewing contracts.

For more information about contract issues, please visit our contract disputes and breach of contracts page.

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