I signed an assignment of claim for damages

UPDATED: Oct 1, 2022

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I signed an assignment of claim for damages

I signed an Assignment of Claim for Damages with a roofing company and I am wondering if no money or work has been exchanged if I can discontinue working with them. They claim I can not and that they own the insurance claim now and the roofing company I would like to use is saying I do not have to honor it because no money has been exchanged. It is recommended that I write a letter to state that since no money and work has been done and that I would like to cancel the contract with them making it null and void. I do not want to get into a legal battle with these people but I also do not want to do business with them because their behavior has been questionable at best.

Asked on December 21, 2018 under Business Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Whomever told you that you can get out of a contract--which is what this is--if no money was exchanged is wrong. You exchanged "consideration"--things or promises of value: you assigned them the claim and so the right to collect, and they promised to do the work. There is value to the claim and value to the promise to do work. If there was an exchange of consideration, there is an enforceable contract; there is no legal requirement that actual money or cash be exchanged. Similarly, that they have not started work does not let you cancel the contract, except as below.
You can only get out of the contract if:
1) You can show the other side committed fraud--lied about something important or material--to get you to sign the agreement. This would let you void the agreement.
2) The other side breaches or violates the terms of your agreement with them. For example, if there is an agreement that work had to be started by a certain date or completed within a certain time frame and they violate that, that breach would let you terminate the contract.

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