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You want to cancel a business contract. Now what do you do?

When you signed that two-year contract with the distributor for your product, it was a big relief. Your product can be sold nationwide now, not just in the New York cities where your delivery truck can go.

But six months into the contract, this relationship just isn’t working for you for a variety of reasons. You determine that you need to find a new distributor and then cancel this contract.

You bring up your concerns with the distributor – again – and let its representative know you want out. The conversation didn’t go well.

Next step? Scour that contract and find the section that describes how it can be terminated. Usually, the contract will contain language such as this:

  1. You can terminate for cause. One party may cancel the contract if the other violates the terms, commits an illegal act or has financial problems, such as bankruptcy. Or, if one company fails to deliver the service as promised, you can get out of the end the contract.
  2. You can terminate without cause. Some contracts contain an escape clause, such as the ability to end the contract with 60 days’ notice, for example. No reason needs to be given.

Before taking the step to end the contract, try to negotiate a change to the terms. You don’t need to cancel if you and the other party can agree to amend the contract.

Sometimes, the other party won’t see things the way you do and you will need to get some help to legally cancel or alter the contract. An attorney experienced in business law can help you to navigate these waters.

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