Contract Cancellation Form: What is it?
A contract cancellation form is a necessary form to cancel or terminate a contract or agreement. A contract generally defines the obligations of each party, and upon its execution, the parties are typically bound to those obligations. However, events may come up that cause one or both parties to decide to cancel or terminate the contract. This is designed to protect the parties by providing a mechanism for them to release one another from obligations that have become impossible or no longer make sense. In most contracts , there is a provision that goes into detail about when a party may cancel or terminate the contract, and how the left under or terminating party must notify the other party.
A contract cancellation form is the vehicle by which the cancellation is requested or effective. Most contracts contain a provision that requires a party to provide the other party notice of cancellation in writing, and assuming that was followed, may provide that a contract is invalid upon the expiration of the notice period.
Anatomy of a Contract Cancellation Form
Parties
The contract cancellation form should identify the parties to the contract. Names and addresses of each party are typically the only required identifying information. The parties could be natural persons or other legal entities such as corporations or government agencies.
Contract Description
The contract description section of the form identifies the contract covering the goods or services to be cancelled. The description usually includes the date of contract, contract number, and description of the subject matter of the contract such as "software license" or "land surveying contract."
Terms of Cancellation
The cancellation terms section identifies whether the cancellation is being issued with or without liability, i.e., if one party is required to pay damages to the other in accordance with the contract terms. This section may also include the reason for termination using language commonly found in contracts such as "unsatisfactory work or defective goods" or "breach of contract." Some contracts require for-cause termination to be by a specific process involving warnings or the provision of other opportunities for cure before cancellation is appropriate.
Signatures
The form should provide places for each party to sign and date the document. Other forms of record keeping and submission are acceptable, such as email communication, but such other methods do not allow for exchange of original copies, which is desirable because of recordkeeping requirements.
How to Complete a Contract Cancellation Form
The following steps will take you through the process of properly completing a contract cancellation form.
Section 1: Policy Information
You will need to enter the policy number and name of the policyholder. You should also indicate the full insured address of the property to be cancelled.
Section 2: Cancelation Inception Date
A date must be entered in the cancellation inception date field. This date cannot be more than 10 days in the future and should not be more than 30 days in order for you to receive a refund. Only fill out the portion on the form that relates to a specific policy. If multiple policy cancellations are being submitted, please complete separate forms.
Section 3: Reason for Cancellation
Circumstances may exist where the cancellation request is being submitted by the lender or attorney involved in a foreclosure proceeding. Typically, the borrower will not know that a cancellation is pending. Many times this creates an issue where the borrower needs to contact their carrier to stop the cancellation once the loan has been paid and the property closed on. The insurer has no obligation to hold funds at the request of a bank. The insurer only has to return or credit the unearned premium to the named insured. In this scenario, it is very important to include the original date the policy was purchased as the cancelled policy will not become effective until after the requested cancellation date if this date is not clearly provided.
Section 4: Payment instructions
The majority of this information is self-explanatory, but if your check is not returned with the respective insurer, you may want to provide a copy of the cancellation submission and a copy of the original check with any correspondence to expedite the process.
If you have not yet sent in your payment for the annual policy, you may contact your bank, credit union or other lending institution to determine the best way to submit payment regardless of the annual premium being returned to you.
Common Situations for a Contract Cancellation Form
Contract cancellation forms are typically associated with the real estate industry, but these documents can be used in any profession or situation where contracts are used and parties need a neutral way to be released from contract obligations. In the real estate sciences, cancellation of a contract is a fairly common occurrence, and these cancellation forms are important to have. However, they are also needed in the following situations and more:
Business Agreement
Any binding agreement can be cancelled and thus require a cancellation form. Few business agreements are as binding as a contract, but an agreement can be used in lieu of a contract when purchasing goods and services and becoming involved in an enterprise. It is important to note that agreements can be purchased from reputable legal websites. This way, there are templates available to adapt to any possible business agreement needs that may arise. Regardless whether an agreement to enter into or remain in a business relationship is oral or written—and thus a legal agreement or merely "agreement"—a cancellation form will be needed to release one or both parties from the obligation.
Service Contracts
These contracts are most commonly seen in the transportation industry, although they do have many practical uses. For example, a contract for hours worked, pay rates, routes, etc., can be cancelled if a worker feels that a different position is a better fit for his or her skills and needs. A contract cancellation form would be necessary here to properly invalidate the original contract.
Real Estate Deals
Myriad agreements can be made during the purchase and sale of real estate. Once again, when one party no longer wishes to be bound by a purchase agreement, a contract cancellation form is needed to avoid further legal issues.
The Legal Nature of a Contract Cancellation
A contract cancellation form is regularly used to rectify the initial agreement, but its application should be preceded with caution. This is because a party that cancels a contract exposes itself to claims and litigation for breach, together with the legal costs that such claims would attract.
Integral to any agreement are the rights and obligations that each party has at any one point. However, if either party finds these terms disappointments, a cancellation of contract could be in their best interest to avoid sufferance. For instance, there is always a possibility that a material term was breached by either party and that they want to cancel the contract if this breach persists. A contract cancellation form, therefore, would seek to address situations where either party simply finds a breach of the agreement unacceptable.
In South African law, parties can give a notice to cancel a contract in the manner in which it was concluded or a manner that will bring it to the attention of the other party, upon which the agreement would then be cancelled after the lapsing of a period determined by the agreement, or a reasonable time period if no such period was agreed upon.
If there were any reserved rights, claims, or obligations under the agreement, these may survive the termination or cancellation of the contract . Thus, any appointed representatives would remain in their position until those purposes have been carried out. After the cancellation of a contract, the parties would still be bound by the terms of the contract in relation to the imposition of a traditional remedy of damages, or in the calculated quantum of damages, until the purpose of the claim has been achieved. Although the liability for damages will continue, it will not be for the performance of the terms of the contract, but for the failure to perform the terms of the contract in the manner agreed to have been affected.
Moreover, contract provisions may specify certain parameters related to the cancellation of the agreement. For example, there may be a notice to be served upon the other party that the contract would be cancelled. In the absence of such contractual provision, the usual stipulation would apply.
Although a contract cancellation form may factor in the essential terms of a withdrawal from the agreement, its application would always require the circumstantial demonstration of its effectiveness. This would additionally apply if the parties also agreed on a different method of cancelling the agreement.
Contract Cancelation Form Alternatives
Sometimes, even when a party has a good reason to cancel a contract, alternative solutions can be found that will enable everyone to walk away from a business deal with an acceptable result. Negotiation, contract modification, and mediation are all viable options to consider before taking a more drastic step.
Negotiation is often the first step to uncovering a solution that will suit all involved parties. It’s the first course of action to take in most disputes, and many issues can be solved over a simple conversation. In contract negotiations, having a written agreement is usually better than a verbal one in that it leaves less room for doubt and misinterpretation. In this instance, it’s essential to document the outcome of the negotiation process in writing.
Sometimes, the terms of a contract need to be modified in order to meet the needs of each party involved. If one party is unhappy with the current terms of a contract but sees the possibility of finding a solution if the contract is amended, it could be worthwhile to explore this option. A contract modification should be made in partnership with the advice of a lawyer with expertise in that area. Any changes made to an existing contract should always be documented in writing, and each party should receive a copy of this document once the amendment is complete.
Mediation is similar to negotiation in that both parties sit down together to discuss their grievances and come up with a solution. In the context of contract termination, this typically involves weighing the potential benefits of terminating the contract against the prices associated with termination. The goal will be to find an alternative to termination that is favorable to both parties, and if one is not found, a mutual termination process could be the next best option. When contracts are in dispute, it’s common for the two parties to seek the opinion of an unbiased mediator to help them find a solution. The mediator is the equal party between both parties to the agreement and will seek to find benefits for both parties so they can move forward happily. A mediator does not have the legal authority to authoritatively end the dispute, but instead works to resolve the problem so that both sides feel like they’ve gotten what they need.
Tips for the Cancellation
To avoid unnecessary confusion and dispute, it is best to follow a few guidelines when cancelling an agreement: Be clear of your intention to cancel. This means that – if at all possible – you should provide clear written notice of your intention to cancel the agreement and your reasons for cancelling. Likewise, you should request a confirmation of receipt and acknowledgement to ensure that there are no misunderstandings resulting from lack of communication. Be firm with your resolve to cancel. The past fifteen years have seen a growing body of laws, form regulations, and industry standards specifically dealing with the cancellation of contracts. Unfortunately, there is still a not insignificant number of people who may claim to have an interest in the agreement you are trying to cancel. To deter any efforts to obstruct your intent, it may be best to indicate your intention to proceed with the cancellation , notwithstanding any statements, arguments, or demands to the contrary. Document, document, document! Whether or not your contract requires the submission of a Contract Cancellation Form, it is highly recommended that you provide and maintain one. A mistake in not providing one page on which your intent to cancel is made clear may result in an otherwise valid cancellation being found invalid due to lack of evidentiary support to prove that you did not intend to be bound to the contract. Also consider maintaining copies of any correspondence or documentation to show that you were acting in good faith. Consult with a lawyer. If you have any doubts about the validity of your cancellation or if you are facing obstacles to your right to cancel, you should consult with a lawyer. A cancellation of contract may result in several legal ramifications that your current legal training may not give you the necessary tools to deal with.
