How to Break a Contract

I have a contract that a supplier is trying to enforce payment on. We signed a contract but never paid the required 50% deposit. The contract letter p2 states:

trading – 50% deposit, balance on delivery

And below signature line it states.. “By signing this & paying deposit you are accepting of the above terms & conditions which can only be varied by a notice in writing & signed by both parties

We thought this meant that we needed to sign AND pay the deposit, and then we would be bound by the terms and conditions of this contract. Since we never paid the deposit, we are not bound by the terms and conditions of this contract. Is that correct? The short and simple response was this –

Contracts are essentially made when there is:

  • offer
  • acceptance
  • consideration
  • intent to form a legal agreement

They offered to do work, you accepted in part by signing the quote. If they acted in reliance upon your signed acceptance, even if you didn’t pay the deposit, and did work, then you probably do owe them money because they have given consideration in the form of doing the work.

The real question is, have they done any work for you? If they have, you owe them money, maybe not all they have asked for, but a reasonable sum for the work that they have done. I suggest you have a frank and honest conversation with them as to why you did not pay the deposit, and why you don’t want to pay the balance now, and negotiate a result you can both live with.

If they haven’t yet done any work for you, they can’t seek payment.

What kind of difference would this kind of advice make for you in your business?

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One Response to “How to Break a Contract”

  1. Michael Hollis December 15, 2013 at 6:22 pm #

    re. “What kind of difference would this kind of advice make for you in your business?”, as this is really a question of ethics I think how it pans out depends on the integrity of the people you are dealing with and, if they are using solicitors or have in-house counsel, the integrity of those advisors.

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