Legal-Ease: Getting out of a contract


By Lee R. Schroeder - Guest Columnist



People sometimes change their minds after agreeing to business contracts. The bigger (in size, effect or monetary value), the bigger the potential remorse. Thus, most people should take their time when dealing with decisions and entering into contracts, particularly those that are bigger in size than with which those people have experience.

A few purchases (like a refinanced mortgage) have a legally imposed “cooling off” period, but most contracts are locked-in and binding the moment that the contracts are agreed-upon.

Nevertheless, once a contract is agreed-upon (in writing for certain things including most real estate and verbally for most other contracts), there are only a few ways to undo or re-negotiate the “deal.” There are five primary arguments often used to try to undo a previously agreed-upon deal. However, none of the five arguments are particularly persuasive.

First, some people say that they did not understand the contract they signed. Almost every person who signs a contract is deemed responsible for knowing the contents of the contract that was signed. A contract is not void simply because a person states that they were misled into signing a contract that was different from what the person thought/understood the contract to be if the person could have known the truth by reading the contract. But this argument sometimes does work in the context of take-it-or-leave-it (adhesion) contracts, like those signed in the context of a new mobile phone contract.

Second, some people say that the other person to a contract did not do what that person was supposed to do, so I should not have to do what I was supposed to do. This argument usually only works in situations where the other person’s non-performance is clear and obvious. Nuances are interpreted in favor of the enforceability of the contract.

Third, some people claim that a contract is not a contract and is instead a promise to give a gift. A promise to give something is not enforceable if there is no reciprocal payment/action/inaction by the gift receiver. However, the reciprocal item can be tiny. If I tell my nephew that he will get a gift if my nephew gets good grades, my nephew’s good grades makes that promise a contract and not a cancellable gift.

Fourth, some people say that they should get out of a deal if the deal is incredibly one-sided or unfair. This is often characterized by saying that a contract was so absurd that it shocks the conscience. For this argument to apply, the deal must be shocking of a magnitude of a retiree trading a multi-million-dollar life savings to rent a Chevrolet for a week.

The fifth argument is “undue influence.” The legal standard for undue influence to end/amend a contract is literally (not figuratively) a gun to your head. If you can walk away, even if it is humiliating, there is almost never undue influence. Unfortunately, some poor and elderly can be more prone to undue influence if they reasonably and actually believe that non-agreement will mean homelessness/death.

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By Lee R. Schroeder

Guest Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

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