We need to cancel a contract

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We need to cancel a contract

We signed a contract with an eBay trading company for the rights to use their software which we have not received yet and training and mentoring while we are still using the software. We paid $3,000 and agreed to a payment plan for the remaining $3,000. We also agreed that when we have built our earnings to a satisfactory level, we would make a promotional video or other form of advertising for their use forever. We are hoping to at a minimum not be required to fulfill the remainder of the contract with no collection activity or credit reporting of the balance. We only signed the contract 3 weeks ago or so and feel that we should be able to have at least a portion of the $3000 we paid last month returned to us thinking $2,000 or so. The contract does include an arbitration clause to solve disagreements.

Asked on February 13, 2017 under Business Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

IF the other party breaches their material (or important) obligations under the contract, such as by not providing the software by an agreed-upon date, that breach may allow you to treat the contract as terminated. But it must be a clear breach of their contractual obligations; if there was no deadline or time frame for them to perform their obligations, you cannot assume they are in breach until you give them written demands for performance and a reasonable time after said demands to actually  perform.
Or if you can show that they lied to you about something material or important to get you to sign up with them, then they may have committed fraud; if so, fraud would allow you to void the contract. 
But you need there to have been fraud or a breach to end the contract without legal repurcussions (unless, alternatively, there is some early termination clause which allows you to terminate now/under these conditions, and you fully comply with its requriements). Otherwise, if there are no grounds to terminate or void the contract, you will remain obligated under it. The fact that you signed the contract recently has exactly zero or no relevance or bearing: if the contract is not void or terminated, it is fully enforceable the moment you agree to or execute it, and there is no ability to get out of it (except as per any early termination clause) simply because only a few weeks have gone by. 
Note that if there is an arbitration clause, then if you try to treat the contract as terminated or void and they disagree, they will be able to force you into arbitration rather than the matter going to court. Arbitration tends to favor the larger businesses or company, not the client or consummer, and is often as or more expensive than court; it is not likely to be a good venue for you.


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