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When is ending a contract worth it?

Sometimes, working with clients doesn’t go the way you want it to. You might have a contract with a buyer who is having you build a home for them, but when supply chain issues, delays and problems with your interactions become too much, you may feel that it just isn’t worth it to continue.

Contracts are important because they go over what happens when one party breaches the agreements they’ve put into place. The penalties may be significant, or, in some cases, they may not be particularly severe compared to the damage that would be done if you continued forward with the contract as designed.

Breaking a contract shouldn’t be your goal, but it may be necessary at times. If you plan to break a contract, here are the steps you should take.

Look over the terms of your contract

The first thing to do is to go over the terms of your contract. If there is an escape clause or a loophole of some kind, you may be able to break the contract without technically breaching it. For example, you may have a timeline set in the contract, but there may be a loophole where it can be extended for issues out of your control. In that case, you might reach out to the buyer and ask if they’d like to walk away due to potential delays. This could, hypothetically, get you out of the contract without breaching it.

Talk to the other party

Before you breach the contract, it may be valuable to talk to the other party. If there is a particular issue that is making it hard to finish a job, the other party may agree to wait for a resolution or to walk away without pursing legal options.

Consider arbitration

If your contract has an arbitration clause, then it’s possible you could go to arbitration with the other party if there is an issue. That could help you resolve problems that are making you want to end your contract rather than breaching it.

Sometimes, it’s worth breaching a contract because the likelihood of penalties is low, but in most cases, the only time it’s worth ending a contract is when both sides are in agreement. If you breach a contract and the other party takes legal action, you could face significant losses.