Terminating a Contract
A breakup is often compared to a broken mirror: better to leave the pieces than risk more damage by trying to pick them up. But when it comes to business relationships, that kind of quick, clean split is often impossible and ill-advised. Contractors facing a split with a customer need to deal with the fallout professionally, addressing payments still due, materials ordered but not yet installed, and warranties yet to take effect. Simply walking off a job, tempting as it may be, is never a good idea; rather, it is a sure ticket to a lawsuit and court date. Here are three steps to resolve the dispute or end the contract—while keeping the courts out of it.
Review The Options
Determine exactly where the trouble may be, and decide if a resolution is at all possible. Is the tension a result of miscommunication? Mismatched personalities? Unmet expectations? If a resolution seems unlikely, take out the contract corresponding to the job, and review your options for next steps.
Terminating a job is never pleasant, but knowing what your rights are can help determine a plan of action. Review the termination provision in your contract. What are the permissible reasons for a termination? Is there a notice requirement? Do the parties have an opportunity to cure the problem before termination can be effective? Are there extenuating circumstances? And look at the correspondence—all emails and texts. They will likely provide information on the parties’ intentions, the site conditions, and the performance levels at various intervals on the subject job. All will have an impact on the parties’ respective rights and obligations.
Arrange An In-Person Meeting
Disagreements don’t often resolve themselves. Small differences can fester and become larger problems if communication isn’t prioritized. Lawyers recommend arranging a face-to-face meeting with the homeowner(s)to discuss any disagreement. Sitting down and talking through a disputed point is often an effective first step.
Terminating a job is never pleasant, but reviewing the contract and knowing what your rights are can help determine a plan of action
If direct contact with the customer is not feasible or successful, consider presenting the dispute to a mediator—a mutually selected, independent third party who can coordinate a settlement meeting. Some 40-50% of all matters that go to mediation end up settling, a quicker and less expensive resolution than a court battle.
Obtain A Written Release
If it is determined that a split is the best or only available option, then look to obtain and negotiate a fair but complete abandonment of all claims. This is formalized through a waiver of liability agreement, commonly referred to as a release. The releasor gives up the ability to make further claims in exchange for the releasee providing something of value, such as forgoing payment of a pending obligation.
While you may believe you were treated poorly by your customer and are absolutely in the right to stop work, know that judges don’t always see things the same way. Written and timely notice of a contractor’s intention to quit a job is a must, as is a last ditch effort to communicate with your customer to try and work through any differences.
