Experienced. Dedicated. Result-Driven.

  1. Home
  2.  • 
  3. Contract Disputes
  4.  • When is a contract considered void?

When is a contract considered void?

Businesses often need to work with outside parties to carry out operations. But sometimes, owners may find the partnership isn’t giving it a good return on investment. In these instances, they may wish to sever ties with a specific service and find another one that better fits their needs.

Unfortunately, cutting ties is rarely easy, as breaking a legally binding contract can often come with steep penalties.

Scenarios like these may worry some business owners, as they fear what breaking this agreement could do to their bottom line. However, there are some ways businesses can leave these agreements without taking a financial hit.

3 ways a contract can get terminated

Contracts typically require at least two parties to meet specific obligations. Depending on the circumstances, the contract may become unenforceable if:

  • The party breaches provisions in the agreement: Typically, both parties strive to have their needs fulfilled in a contract. But like most things in life, not everything goes according to plan. For instance, a business may specify that they want a particular product sent to them at a specific time every month. However, if the third-party shipping the product sends it late, it could affect a business’s operations and bottom line.
  • The party can’t perform its stated duties: When parties complete their specific responsibilities, this is called performance. However, there may be times where one party can’t carry out those duties. For example, if the independent truck driver the business hires gets injured, the business can terminate the contract as their needs won’t likely get fulfilled.
  • The party participated in unlawful practices: While most business owners hope they don’t work with a third-party that breaks the law, it can still happen. If they’re found guilty of an illegal action like fraud, the business reserves the right to rescind the contract.

Business owners, even those who’ve been around for years, know that contracts can be challenging to form, enforce and leave if necessary. But with the right assistance, businesses can navigate complex agreements while making sure their needs are getting fulfilled.