Cancelling or breaking a contract

If something you bought doesn't work or isn’t as it was described, you can cancel the contract. Under BC law, when you buy something, it’s protected by a legal warranty. When you buy something from a business, it must meet these conditions: 

• it must be fit for the purpose you bought it for (that is, it has to do what it’s supposed to do)

• it must be of merchantable quality (it has to work and can't be damaged)

• it must be durable for a reasonable period of time

• it must be “as described” (it has to match the seller’s advertising and any statements or representations made about it at the time of the sale) 

These conditions apply whether the seller mentions them or not. They are in addition to any warranty the seller provides. 

If any of these conditions aren’t met, you’re entitled to cancel the contract, return the item, and ask for your money back.

Learn more about the legal warranty and your options if there’s a problem with a purchase.

With some purchases, you can change your mind during a cooling-off period.

This stretch of time is sometimes called a trial period. Within it, you can legally cancel the contract without paying a penalty. You don’t need to give a reason.

The length of the cooling-off period varies depending on what you’re buying.

Under BC law, there’s a cooling-off period when you sign a contract:

• For a product or service you buy at home. For any direct sales contract, where you buy something in person at a place other than the seller’s permanent place of business (for example, on your doorstep), you have a cooling-off period of 10 days after you receive a copy of the contract.

• To join a fitness club or yoga studio. For any continuing services contract, where you receive services on an ongoing basis, you have a cooling-off period of 10 days after you receive a copy of the contract.

• For cellphone service. When signing a cellphone contract, you have a cooling-off period of 15 days after your cellphone service begins.

• To lease a car. When leasing a car, you have a one clear day cooling-off period after you sign the lease. 

• To buy a home. If you buy a home, you have a cooling-off period of three business days to cancel the contract (although you’ll have to pay a cancellation fee to the seller of 0.25% of the contract price). When you buy a newly built condo, you have a cooling-off period of seven days after you sign the contract or acknowledge seeing the developer’s disclosure statement, whichever comes last.

If you decide during the cooling-off period that you don’t want to proceed, you need to tell the other party in writing. Once they get this written notice, you have no further legal obligations under the contract. 

The cooling-off period begins the day after you sign the contract. For example, if you sign a cellphone contract on February 1, your 15-day cooling-off period starts on February 2 and ends on February 16. Some contracts specify business days for their cooling-off periods, so be mindful of whether to exclude weekends and holidays from that calculation.

In providing the written notice, you can use any delivery system — email, mail or courier for example.

If you don’t give notice during the cooling-off period, you’re legally bound by the contract. 

Most retailers have some form of return policy in place, though the specifics vary widely.

Some retailers advertise that customers can return any product purchased from them. In this case, customers have the legal right to return a product for a full refund, even if what they bought is perfectly alright. (Note this right can be limited by any conditions attached to the return policy, such as being in the original packaging, having minimal signs of wear, and so on.) 

Some retailers advertise that customers have a certain number of days to bring any product back for a refund. If no time limit is specified, the law would likely say you have a “reasonable time” to return the goods. There isn’t a set definition for “reasonable time.” It varies depending on, for example, what was bought and where it was bought.

A retailer may advertise that it accepts returns as long as the product is, essentially, unused. If the retailer doesn’t say specifically what “unused” means, the law would probably say the product has to be new or near-new for a refund to be issued.

Some retailers display a sign that says “No refunds — only exchanges.” It’s possible that if you return an item to a store with that policy, you could get your exchange — no reason required — even if what you bought is perfectly alright.

If a seller talked you into a contract by telling you something that turns out not to be true, you may be able to cancel the contract. This is called misrepresentation.

For example, if you buy a painting from Carl, and learn later that Carl falsely told you the painting was an original (knowing it was only a copy), then you could ask to cancel the contract due to Carl’s misrepresentation. 

The false statement must be one of fact, not of opinion or promotional flourish. For example, a seller claiming his car is worth $10,000 is expressing an opinion. But a seller saying he paid $10,000 for it is making a statement of fact.

Claims in advertisements such as “our toothpaste cleans whiter than white” aren’t regarded by the law as representations of fact. They are seen to be promotional opinions.

“I went to a used car dealer to buy a car I’d been eyeing online. It looked like a good deal. The sales person said the car was in perfect shape and that at this price it would sell very quickly. They put on quite a bit of pressure. I agreed to buy it and pick it up in a week. A few days later, I talked to a mechanic who told me that the model I was looking at has a history of major problems. When I returned to the dealership, I brought my mechanic. They spent a few minutes looking under the car and at the engine and pointed out several big problems. The salesman was furious, and told me he’d sue me if I didn’t pay. But I refused to be bullied, and just walked away. They never sued, but I’d have been prepared with a good answer if they ever tried.”

– Anthony, Burnaby, BC

Under BC law, a business can’t use unfair practices to convince you to buy something. Unfair practices include making statements (orally or in writing) or any conduct that might deceive or mislead you.

For example, a business must not:

• tell you something is of better quality than it really is

• tell you something is only available for a limited time if that’s not true

• tell you you’re getting a special price or benefit when they’re really offering the same thing you can get elsewhere

Another type of unfair practice is when a business does something that’s not right or reasonable. The term used in law is unconscionable. Examples of unconscionable practices include:

• taking advantage of any vulnerabilities you may have — such as any physical or mental disability, illiteracy or language difficulties — that affect your ability to protect your own interests 

• charging far more than what’s reasonable for something

• pressuring you to buy something they know you can’t afford

If a business does something unconscionable, any agreement you signed is no longer valid.

If there’s a fundamental misunderstanding between you and the party you’re contracting with, one of you can ask for it to be cancelled under the legal principle of mistake. The mistake might be:

• who you are contracting with,

• what’s in the contract, or 

• what the contract is about.

For example, if Fred believes that he is buying a painting from Carl, but Carl believes he is only renting Fred the painting for a special party at his home, either Fred or Carl could ask for the contract to be cancelled because there was an important misunderstanding about what was being exchanged.  

In most standard consumer contracts, this concept of fundamental mistake rarely arises. Although you may complain that you didn’t understand the papers you were signing, a perfect understanding of all the terms of a contract is not necessary to make it binding. If you understand the basic terms of the contract, it’s binding.

If you didn’t bother to read some of the “fine print” in a contract before you signed it, you’ll probably still be bound by the contract. 

A contract can be cancelled if someone threatens you. For example, if someone suggests physical harm may come to you unless you sell your car to them, this is not a valid contract. You didn’t enter the agreement voluntarily.

A contract can be cancelled if you don’t have the legal capacity to enter into it. To make a contract you must be able to understand the nature of the contract and its effect on you.

You can’t legally enter into a contract if your mental state prevents you from understanding the result of your actions. For example, if you are very drunk or under the influence of drugs when agreeing to something, you could ask to  cancel the contract you entered into while you were in that state.

“My flower shop had a contract to deliver 100 bouquets to a graduation ceremony. I was en route to the ceremony with the flowers, and a forest fire caused the highway to close. I couldn’t get through. I felt dreadful, as the organizers had to go ahead without flowers. But I was excused from my obligation under the contract because the fire was an ‘act of God.’ 

– Cheryl, 100 Mile House, BC

If something beyond the control of a party prevents them from doing what they said they would, then they’re typically excused from carrying out the contract. 

For example, let’s say you hire a moving company to deliver a piano to your home for a wedding reception. The company arrives six hours late, just as the reception is ending. If a flash flood on the highway that afternoon prevented the moving company from delivering the piano, the flood would be considered an act of God that prevented them from carrying out their part of the agreement. They’d be excused from their obligation to deliver the piano. (And you’d be excused from your obligation to pay them.)

To be considered an act of God, the event must be outside of the party’s control. It must have been impossible for them to predict the event and prevent its negative impact. If the moving company arrived late due to running out of gas on their way to deliver the piano, that would be considered an act of carelessness, not an act of God. The incident could have been prevented. The company would be held responsible for breaking the contract. You wouldn’t have to pay them.

One other thing: be sure to check the contract for an act of God clause. There might be a section that specifically deals with unforeseen events, in which case, you’d be bound by those terms.

Let’s say you change your mind about buying something. Or you know you won’t be able to perform your end of the bargain on time. Or you don’t actually have enough money to pay for the thing you agreed to buy. How can you get out of the contract?

Legally, you can’t really. Without a good excuse (we’ve outlined some of the more common ones above), you’re legally obligated to uphold your end of the bargain. 

You can still try to back out of the deal, but it’ll be up to the other side to agree to let you. Consider writing them a letter or email outlining why. If you’re direct and honest, the other side might be willing to let you off the hook, even if they’re a bit frustrated. Check out work out a problem, below, for more tips. 

Once you understand your legal rights and options, decide what outcome you’re after. Do you want to cancel the services before they’re delivered, or before you have to provide them? Do you want to refuse to pay for something that turned out to be sub-par?

Remember, you don’t need to go to court to cancel a contract — the parties can just agree to cancel it.

Locate the signed contract. Read it carefully to understand what you’ve agreed to. You should also locate any receipts, emails, or other correspondence that may be essential to show you have a valid contract.

Each party to a contract is legally obliged to carry out their part of the bargain, unless they have a legal excuse (the main ones are explained above, under what you should know). If a party doesn’t do what they said they would, they are in breach of contract. 

The law offers three different solutions (or remedies) when a contract has been breached.

• The contract can be cancelled. The parties are restored to their original situation.

• The party in breach can be ordered to pay damages to compensate the other party for any loss suffered. The damages are designed to put the injured party in the same position as if the contract had been successfully performed.  

• The party in breach can be ordered to perform the contract. The party is basically told to do what they promised in the contract. This is an uncommon remedy only handed out by courts in specific circumstances.

Which solution applies in a given situation depends on what’s wrong and what kind of agreement was made.

One factor is whether any breach relates to a condition in the contract. A condition is an essential term in the contract, a term so important that without it one or other of the parties wouldn’t have entered into the contract. 

When a condition is broken, the contract can be cancelled. Generally, when a non-essential term of the contract is broken, the injured party can recover damages but the contract can’t be cancelled. 

If you’ve decided to cancel a contract, contact the other party and explain your reason. Tell them what you want. 

Speak with them in person or over the phone. Keep notes of what you discussed.

Write a letter to the other party explaining that you’re cancelling the contract. You can use one of our template letters for cancelling a contract, due to late delivery, poor work, or for other reasons. Or you can follow our guidance on writing a demand letter.

In the letter, keep the tone professional and to the point. Explain why you’re cancelling the contract. State when you would like the contract to end.

Show in the letter that you’re following any rules set out in the contract for cancelling the contract. For example, if the contract says the contract can be cancelled by either party with 30 days notice to the other, state that in the letter.

If the other party performed services under the contract, thank them for their service and wish them well.  

If you want to be sure the other party receives your letter, send it by registered mail. 

Keep a copy for your files.  

If none of the steps to this point work, you might think the only option remaining is to bring a lawsuit. But even with a good case, a court claim can take a very long time. You have to fill out forms, send them to the other side, wait for their response, prepare for court, go to a bunch of hearings, all while spending money in fees to keep the process going. Then, even if you do win, you’d still have to enforce your judgment to ensure the other side pays up, which means more forms, hearings and time.

There is another path. It’s to try mediation. This is where the people in a conflict meet with a neutral person (a mediator), who helps them find a solution they agree on. The mediator manages the process and organizes your discussions, so you and the other party feel comfortable sorting out your problems together. Mediation is less expensive than court, and much faster. Here, we explain how mediation works.

If nothing has worked, and a meaningful amount of money or principle is at stake, it’s time to bring a legal action. See our guidance on bringing a lawsuit, which walks you through the process, including what venue to bring it in, the forms to fill out, and what to expect.

Yes. If all parties to a contract agree that they don’t want to proceed, they can agree to let one another out of the contract. 

For example, let’s say you agree to sell your dining room table to Wendy. Before you deliver the table, Wendy changes her mind about buying the table because she doesn’t have the money. Wendy may ask you to agree to let her out of the contract. You may prefer to find a new buyer who can pay, and you may agree to end the contract with Wendy. 

However, you don’t have to do this, and nothing can be done to force you.  

If your contract is cancelled, it’s as though it never existed. The people involved must return to the situation they were in before the contract was entered into. To do this, they must give back to the other person everything they received because of the contract.  

Let's say that Quinn sells her stereo to Thomas for $1,000. The stereo turns out not to work as described. Thomas tells Quinn he wants to cancel the contract. Thomas must give back the stereo to Quinn and Quinn must give back the $1,000 to Thomas.  

In the case of a contract for services, the person who performed services obviously can’t demand that the services be returned in the form of services. But that person can ask for payment of the value of any services performed before the contract was cancelled.  

For example, let's say that Lin hires Grace to renovate her bathroom for $5,000. While the renovation work is in progress, Lin decides she wants to cancel the contract because she isn’t happy with the work Grace is doing. As Grace has finished half of the planned work, she can ask to be paid $2,500, the value of the services performed up to the time the contract was cancelled.

For many consumer purchases, your receipt is often your only proof that you purchased a good from a particular store on a particular date. The law doesn’t give you a broad right to return an item (that is, cancel a contract) if you don't have a copy of your receipt. 

It's even trickier today to keep all of our receipts — especially since everything is going digital. Remind yourself to snap a photo of your receipt on a smartphone or to set a reminder of certain deadline dates imposed by a retailer for returns or refunds.