Can I Void a Contract in California if the Other Party Fails to Perform?

Laine Wagenseller of Wagenseller Law

The whole point of having a contract is to obtain assurance that another party is going to actually do something, as in provide a good or a service, and that, if the party fails to do so, there will be a way to either force that party to perform or to win financial damages for their failure. But, in some cases, once one party gets into the contract, they find that, for whatever reason, they no longer want to be bound by the contract and are looking for a way out of it. Such reasons can include a job being much harder than previously thought, goods or services no longer being needed, or just general unease about working with the contractual partner. But the other party was looking for the same assurance of your performance when you entered into the contract, thus you are going to need a legally valid reason to void the contract or otherwise be freed from your obligations. If the other party has not performed on its obligations under the contract, that may or may not be a way to get out of your own obligations.

Material Breach in California

To get out of contractual obligations based on the argument that the other party has not performed under the contract, a party will have to show that the other party’s failure was a material breach of the contract. What is and is not material is a flexible, fact-intensive standard that will look at whether significant aspects of the contract were performed.

At one extreme, if you hired painters to paint every wall surface in a 50-room office building, and they accidentally failed to paint the back of one office door, this will certainly not be a material breach, and you will not be released from your obligations to pay the painters under the contract (less whatever costs you incurred for actually finishing the project). On the other hand, if the painters only painted 10 of the rooms before the workers moved on to a new job and are now demanding payment via the contract, this is obviously a much stronger case that there was a material breach and there will be no breach of contract on your part for failure to pay.

In addition, to argue material breach as a way of avoiding obligations, it will also be necessary to show that your performance in the contract was dependent on the other party’s performance, per the terms of the contract. For example, if payment for the painting was conditional on the painting being completed, this will satisfy the dependency requirement. But if both parties agreed to perform under a contract, and one performance was not dependent on the other, then one party cannot void his obligations because the other failed to perform (but that party can still sue the other party for breach of contract in such a case). 

Other Ways to Void Obligations Under a Contract

The other party committing a material breach of a contract is not the only way to get out of the obligations of a contract, however. Other ways include showing that there was:

  • Fraud used to induce a contract
  • Mutual mistake by both parties concerning a material aspect of the contract
  • Duress or undue influence used to induce a contract
  • Lack of consideration (meaning one party was merely making a promise and receiving nothing in return)
  • Unconscionability of a contract (extreme unfairness)

Anytime you are considering not performing under a contract, you are risking a breach of a contract action if you do not pursue your rights correctly, so you are strongly advised to work with a breach of contract attorney in pursuing your options.

Contact the Commercial Contract Attorneys at Wagenseller Law Firm

At Wagenseller Law Firm in downtown Los Angeles, we provide full legal services to individuals and businesses in business and real estate litigation matters. Contact Wagenseller Law Firm today to schedule a consultation to discuss your commercial contract matter.