Legitimate reasons such as fraud, misrepresentation or a serious mistake may allow the other party to terminate your contract. When the other party alleges that the agreement is causing it to lose a significant amount of money, however, it must also provide proof of the harm. An attempt to get out of a contract might include publicly shaming your company with allegations of wrongdoing, which may also border on or reflect defamation.
Approximately one year after a city in Texas signed a 25-year contract with a solar energy company, the city sued to rescind the agreement. The complaint alleges the solar company withheld critical information about the plant’s future performance during negotiations. It claims ongoing financial losses and that it is losing money after a rate increase. The city seeks $1 million in damages and a termination of the contract, as reported by The Texas Monitor.
Energy costs generally fluctuate based on the market’s supply and demand. The city may have a difficult time attempting to convince a jury that the energy company intentionally withheld information in an effort to force the city to pay high energy rates.
Drafting a contract that includes a confidentiality agreement may prevent a party from publicly shaming the other during a dispute. Parties may also agree to mediate a dispute privately or through arbitration to help avoid negative publicity.
Our page on the types of commercial disputes we litigate provides more information about your business rights.