Can you cancel a binding service contract?

Answer 1

First, if the "contract" is in fact a contract, it is, by definition, binding. If it is not binding, then it cannot be a contract.

Now, as to whether you can "cancel" a contract.

If all parties to a contract agree, the contract can be avoided. You can simply come together and decide not to go forward with it anymore. However, in theory, you make a new contract when you alter the terms of an existing contract. Therefore, you want to make sure the new contract is given for consideration. For example, let's assume you have agreed to pay a guy $100,000 a year to keep your house perfectly spotless for the next twelve years. Times changed, and you don't have the money. It will cost him something to sue you for it, and instead of pursuing the issue, he could just take on a new client on his waiting list (he's that good). The sensible thing to do is to just agree to move on, and sometimes people actually do so. However, you'd want to pay him something to let out of the deal. You could pay with anything (wash his car, give him $10, promise not to hire another cleaning service for a period of time, whatever).

If one party to the contract fails to perform, the other party may declare a breach and stop performing. Let's go back to the house cleaning deal. But this time, instead of you running out of money, let's say the cleaner sucks. The contract provided for a "perfectly spotless" house, and let's also say it provided that you, and you alone, got to determine what constitutes perfectly spotless. You determine that the service rendered is nowhere close to perfectly spotless. So, you inform the cleaner that he is in breach of the contract and that you won't be paying him anymore. Assuming these facts, you're in the right, but you're also going to have defend yourself when he sues you for payment.

Further, you may, at any time, breach a contract on purpose. Doing so does not relieve you of your obligations under the contract, but there are situations where you are (economically) better off not performing and paying the consequences. See, for example, the current trend of people simply stopping their mortgage payments because their house's value has plummeted. Most folks would consider this stealing, but it is an option.

Some corrections to the way the answer previously stood:

You have answered the question in your question. If it is binding, you cannot cancel it. There are lots of way to make a contract not binding. [no there aren't. in fact, there are exactly zero ways to make a contract not binding. if it isn't binding, it isn't a contract.] If the contract has a cancellation clause. [this doesn't make a contract not binding. it merely provides a means to shorten the term (more precisely, it provides a means to not lengthen the term).] If there was a breach by the other party. [a breach doesn't "cancel" the contract. if it did, you would have no recourse. a breach give you a cause of action action against the breaching party.] However with breach, you sometimes are required to keep performing or you will be on the hook. The most effective way, I have found, is to contact the person your contract is with and explain the situation. If you have a valid reason to cancel the contract and the other party would not be unjustly injured by you doing so, they will most likely agree to abolish the contract. [just make sure you pay something for the alterations.] Business relationships are like any other, communication is vital. Communicate with your service provider and explain to them your grievances. If your grievance is that you can no longer afford the service, that might not be enough, absent some extenuating circumstance that caused your inability to pay. If your problem is with the service being provided, communicate this with them. Request an adequate assurance that they will fulfill their end of the bargain. Do this by asking them to agree to some additional terms. [bad idea. do this by sending a letter (yes, on paper, in the mail, with confirmation of delivery if you smell a lawsuit coming) stating that they are in breach of the contract, and that, as a courtesy, you are giving a certain period of time for the breach to be cured. further, you should clearly state that, by extending this courtesy, you are not waiving any of your rights under the contract, and that you retain the right to bring an action for breach at any time.] Provide specifics in this new agreement. When they do not meet these new specific terms (and you have stated the right to cancel in the new agreement), you may cancel the contract. [no you can't. you can declare a breach, inform the other party that you want them to cure the breach, and if they don't, you sue. further, you inform them that, in light of their breach, you are suspending your performance until the situation is resolved. you never "cancel" the contract. it remains in force at all times.]

The problem is that when you are dealing with large businesses, they often have little room for negotiation and once you have entered into a contract with them, you are bound.

The more specific your question, the more specific the answer will be on this forum.