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Need to Cancel Your Contract? Here's How to Do It Legally!
Cancellations with clients can feel like the worst thing in the world, it’s something that can keep business owners up at night running through all the what-if scenarios…
Especially, if it’s you canceling the contract with them. And that could be for a number of reasons; like a family emergency, or the client has been a nightmare to work with and you are ready to set boundaries, or they have deliberately breached your contract.
Obviously this issue is a touchy subject because no one ever intends to enter into a contract to terminate it before all parties have completed their performance. Also, sometimes canceling can lead to bad tastes in clients' mouths, yucky feelings all around, and bad reviews (which is the worst case scenario).
So let’s look at how to cancel on your clients legally and make sure you are protected as the business owner at the end of the day.
HOW TO APPROACH A CANCELLATION
Cancellations can be tricky and if you are the one who is canceling the contract, you will want to be delicate about it. My first piece of advice is to document that decision to cancel in a signed agreement and explain what is going to happen to any fees your clients have paid thus far.
A cancellation contract will be sent out to your clients as a stand-alone contract. A cancellation contract will terminate and supersede the previous service agreement and also any oral agreements you had with your clients (say through emailing back and forth or on a phone call with them).
WHAT IF THE CLIENT HAS BEEN A NIGHTMARE OR ISN’T RESPONDING?
Before you cancel the contract try to reach out to your clients multiple times. Issue them warnings and explain that if you cancel the contract they will not receive their retainer back.
You want to be professional in these situations while also being firm in your business policies!
If you cancel due to lack of response from your client you are in the right to keep the retainer- in situations like this it might be best to cancel because your clients are preventing you from fulfilling your obligations under the contract.
Keep in mind that if you decide to keep the retainer you may end up with chargeback scenarios or even threats of lawsuits. Although you are in your right to keep the retainer you may want to return it to avoid dispute in this case. Now I would ONLY return it if you have done little to no work with this client and it is early on in the process.
Make sure you try to have them sign a cancellation agreement. They may not sign it and it's okay but they should be receiving an email from you requesting their signatures on the agreement and notifying them of the termination of the contract.
As a smart business owner it’s also important to think about when you want to cancel. You should be canceling as soon as you know you need to. Try not to leave your clients high and dry, unless it’s totally unavoidable. Because although they may be in the wrong, or in breach of contract, your integrity as a business owner needs to be intact and I always like to think about if roles were reversed and someone was canceling on you. Tensions are high in these situations, but by canceling as soon as possible you may be able to mitigate some of the fall out.
MORE FROM THIS EPISODE:
Tune into Episode 158 and learn more about cancellations including how to cancel if you are experiencing extenuating circumstances or an emergency, the clauses I recommend you have in your cancellation contract, and more tips on how to handle cancellations with professionalism! If you want more helpful business advice as you’ll hear on the podcast, be sure to join The Legal Paige Facebook Community where thousands of entrepreneurs just like you are getting real-time answers about running a professionally and legally legit business.