3 Steps on how to legally cancel a contract

As attorneys, we tend to deal with situations where clients are under the impression that once a person is in breach of a contract, the contract is automatically cancelled.

Unfortunately, it is not as simple as accepting the agreement is null and void.  If the correct procedure is not followed, it could cost you more money, your damages could increase, precious time is being wasted and even worse, the agreement you think has been cancelled might not in fact be cancelled.

Many people tend to skip the mumbo jumbo of legal contracts as the terms contained therein usually contain various words which the regular person does not always understand.  Be that as it may, once all the parties sign the agreement, you are bound by the terms contained therein.

Step 1: Read your agreement

Read your agreement again and ensure that you understand the procedure you need to follow to enforce the terms thereof.  Look out for the breach clause, the clause that stipulates how notices are to be delivered and understand the time periods that addresses the breach clause.

Step 2:  Place the defaulting party on terms

One cannot merely cancel the agreement if the terms were breached.   You need to afford the defaulting party an opportunity to remedy the breach.

Write a letter to the defaulting party.   Inform them which terms of the contract they are breaching and request them to remedy the breach within the period as stipulated in the agreement.   It is imperative that you strictly comply with the time constraints and the method of delivery.  If not, it could be regarded that proper notice was not given.

If the person remedies the breach within the terms period, the agreement remains in place and the parties need to adhere to the terms thereof.

Step 3:  Cancel the agreement in writing 

If the person fails and/or neglects to remedy the breach within the period stipulated above, the agreement may then be cancelled.  There is however an exception.  If the agreement falls within the ambit of the Consumer Protection Act, Act 68 of 2008, Section 14(2)(b)(ii) of the Act states that the agreement may only be cancelled 20 business days after the person in breach was notified and requested to comply with the agreement.

Once again, write a letter to the defaulting party and inform them that they failed to remedy the breach and that the agreement is cancelled in terms of the breach clause and/or in terms of the Consumer Protection Act.

Given the fact that all contracts vary, some may contain complex terms and conditions and certain intricate factors may need to be taken into consideration when attempting to cancel agreements.  Therefore it is always best to obtain proper legal advice from a legal representative.

Your legal representative will ensure that you comply with the terms, limit your damage, curb unnecessary legal expenses and properly cancel your agreement.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)