Teen Titans Meet Starfire (Flashback) - Teen Titans: The Judas Contract
How to Know when a Contract Comes to an End by Termination
Terminating a contract means ending the contract before it’s completed--that is, before the contracting parties have performed all of their obligations under the contract. Typically, the termination of a contract relieves the parties of their unperformed obligations, but the parties are still able to pursue claims for damages.
Checking for Contract Fulfillment
Determine if both parties have fully performed the requirements of the contract.A contract will typically specify what “completion” of the contract requires. The document should define all of the terms of a party’s obligations.
- For example, if you entered into a contract stating that you would sell a car to another party for 0 on July 1, 2014, the contract was fulfilled when the exchange of car and money occurred on the specified date. Both parties performed your obligations under the contract when you tendered the car, received the payment, and relinquished ownership of the car.
- When the obligations of the contract are fulfilled, the contract is complete. There is nothing further for either of you to do.
Base contract fulfillment upon obligations, not upon time.A contract is completed when both parties have met their obligations, even if the terms estimated a longer completion time than was necessary.
- For example, you may hire a contractor to repaint your house. The contract may call for him to complete the job within a month, but he actually finishes in two weeks. The painter is not required to continue working for you for the remaining weeks of the month.
- The contract is fulfilled once the job is complete and you have paid for the services, even if the completion date is in advance of the original estimate.
Check the contract for a stipulated end date.If the contract is supposed to end on a specified date, the contract will terminate on that date.Parties can override the ending date written in a contract. If the parties continue on as though the contract is still in effect, even after the specified termination date, the contract could continue past that date.
- For instance, if you subscribe to a monthly magazine for a 12-month term, the contract should end after that period. If, however, you receive a magazine on the 13th and 14th months and take no action to return them or contact the company about the error, the contract will continue. As long as you accept the magazines, and the company keeps sending them, both parties are continuing with the contract, and you will be required to continue paying for the magazines.
Recognize that contracts can be continued by verbal agreement.A contract may continue under verbal agreement if you and the other party verbally agree to extend or continue the contract. If the contract has continued under verbal agreement, it may be difficult to determine the new termination date.
- For example, imagine you contract to employ a tutor for three months. At the end of that period, you and the tutor have a conversation and agree to continue the contract. You have continued the contract under verbal agreement. You could agree upon a new ending date or could agree that either party can terminate the contract at any time.
Put a new contract in writing.Ideally, if you would like to extend a contract, you should do so in writing rather than verbally. You can either complete a new contract for the new term or modify the existing contract to reflect the new end date. Verbal agreements are usually binding, but they can be difficult to prove in court. Having the contract in written form protects all parties.
Look for an existing agreement between the parties.Sometimes parties to a contract will mutually decide to end the contract. If both parties agree without coercion, then the contract may be terminated as of the date of the parties’ agreement.
- Such a mutual agreement to end the contract may occur for several reasons. For example, a mutual agreement might be reached if neither party wants what the other party has offered under the contract. Other examples include a situation in which neither party enjoys working with the other party and would like to enter into a contract with someone else, or one where the contract is not profitable for either party.
- For example, if you and a business partner contracted to operate a business together, but later both decided to go separate ways, you could mutually agree to terminate your contract.
- If one party to the contract forces the other party to agree to the termination using threats or intimidation, the termination will not be valid and the contract will remain in effect.
Identifying a Terminated Contract
Determine if a contract has ended through abandonment.Abandonment occurs when neither party completes their obligations under the contract, whether purposefully or inadvertently, by the time the contract specifies.If both parties abandon a contract, the contract is terminated and ceases to have any legal effect.
- For instance, imagine you contract with a friend to sell your car for 0 on July 1, 2014, at 10 am. On that day, neither of you show up (you don’t bring the car and your friend doesn’t bring the money). This contract has been abandoned because neither party did what they were supposed to under the contract. It is not termination by mutual agreement because you did not agree together to terminate the contract.
- Because abandonment occurs without any express agreement between the parties (unlike a mutual termination agreement), it may be difficult to tell whether the contract has been abandoned.
- If one party abandons the contract but the other party does not, the contract will remain in effect and the non-performing party may be liable for breach of contract.
Identify a material breach of contract.If one party breaches a contract, the other party may terminate the contract and refuse to abide by its terms.Amaterialbreach of contract occurs if one party receives some act, good, performance, or service substantially different from what is specified in the contract. In these cases, the nonbreaching party is justified in terminating the contract because of a breach. She is also entitled to damages or remedies for breach of contract.
- For example, if you hired a children’s birthday party clown and were sent a Benjamin Franklin impersonator instead, this would be a material breach of contract.
- As another example, if you hire a contractor to paint your home, and the contractor shows up one month after the contracted start date, you would be justified in terminating the contract because of the contractor’s material breach.
Be realistic about minor breaches of contract.Aminorbreach occurs when one party fails to perform some element of the contract, but the rest of the contract is fulfilled. In the case of minor breach, the nonbreaching party is not permitted to terminate the rest of the contract. In most cases a minor breach does not cause a significant loss, but if the nonbreaching party has some losses, he or she may be eligible to recover damages or remedies.
- For example, if you hire a contractor who shows up 20 minutes late on the first day, the breach is not serious enough to warrant termination.
- If you believe a breach is serious enough to warrant termination, be sure to keep all documents and materials related to the contract and the breach. If the other party tries to fight the termination, calling it a minor breach, you’ll have documentation to support your claim of a major breach.
Assess whether there has been non-fulfillment of a contingent condition.The obligations of a contract may be contingent on a particular condition occurring. Conditions may be acts or events. Failure to meet a condition will terminate the parties’ obligations under the contract. If a contingent condition does not occur, the contract is immediately terminated unless the parties affirmatively agree that the condition is excused and that the contract will remain in effect. There are two common types of conditions: conditions precedent and conditions subsequent.
- Acondition precedentmeans that the contract does not become binding until a contingent act or event occurs.
- For example, many home sale contracts include a contingent condition that the sale will not be finalized until the house passes a building inspection. If the house does not pass the building inspection, the contract of sale is terminated.
- Acondition subsequentmeans that a previously binding contract will end upon the occurrence (or non-occurrence) of the contingent act or event.
- For example, an employer hires an employee with the condition that the employee finish college and get her degree within six months of her hire date. If the employee does not finish college and get her degree within six months, the contract is terminated.
- Acondition precedentmeans that the contract does not become binding until a contingent act or event occurs.
Determine if a contract has been terminated through impossibility.A contract may be terminated if the terms of the contract become impossible to complete, or if it would cause one party an extreme hardship to complete.Common situations in which a party’s performance of a contract is impossible include:
- Destruction or unavailability of the subject matter of the contract.For example, if you hire someone to paint your house and your house burns down, the subject matter of the contract (the house) is destroyed and the contract is impossible. The contract is thus terminated.
- Death or incapacitating illness.If one of the parties to the contract suffers death or an incapacitating illness (physical or mental), the contract may be terminated.
- Supervening illegality.Supervening illegality occurs if a contract is legal when entered into, but a subsequent change in the law has made its performance illegal. For example, imagine that you are a farmer who has contracted to sell your carrots to your local supermarket. If your city passes a law that makes the sale of local produce to supermarkets illegal, your contract is terminated because you can no longer legally complete the terms.
Identify a contract that should be terminated due to impracticality.A contract can be terminated if the performance of the obligation has become highly impractical or difficult by the occurrence of events that were not caused by an involved party.
- For example, if a book publisher goes out of business, it is impossible for them to continue publishing books. Therefore, the contracts they currently have with writers may be terminated.
Identify illegality in a contract.In some cases, a “defense of illegality” may be used as a defense against breach of contract suits.A contract that requires one or more parties to do something illegal is void. This is different from some other types of termination, because the court considers the contract to never have existed. Neither party is entitled to damages or remedy if one party breaches the contract.
- For example, if you contract to hire a poker dealer to run a game in a state where gambling is not legal, the contract is void because the service cannot legally be performed.
Consider other means of terminating a contract.In addition to the situations listed above, there are other circumstances that could enable a party to terminate a contract. Some have to do with whether the contract was legally enforceable to begin with. Some situations which may lead to contract termination include:
Fraudulent misrepresentation.If the content or execution of the contract was misrepresented (lied about) in order to defraud (trick or mislead) the other party, you can terminate the contract.
- For example, if you enter a contract to sell your car to another person but you know that the car does not run and you do not disclose that information in the contract, you have committed fraudulent misrepresentation and the contract may be thrown out.
Duress.If one of the parties to the contract was forced to enter the contract against her will, the contract is void and may be terminated.
- For example, if someone is blackmailed or threatened into signing a contract, the contract will not hold up in court.
Undue Influence.If one of the parties to the contract has considerable influence over the other party, the contract may not have been entered into fairly.
- For example, a person who enters into a contract unrelated to the workplace with her boss may have experienced undue influence and felt as though she did not have an option about the contract.
- Fraudulent misrepresentation.If the content or execution of the contract was misrepresented (lied about) in order to defraud (trick or mislead) the other party, you can terminate the contract.
QuestionWhen does a verbal contract if no end date is set?wikiHow ContributorCommunity AnswerThere must be an end date specified in order for it to be a legally binding contract.Thanks!
- Verbal contracts are usually considered binding. However, it can be difficult to prove these contracts in a court. It is best to obtain all terms in a written contract that both parties have signed.
- You cannot contract to perform an illegal service or act. These contracts are considered void, meaning it is as if they never existed.
- If you were tricked into making a contract, such as by fraud or misrepresentation, you can rescind the contract and it is terminated.
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