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Does a Contract Need Escape Clauses?

Burgoyne Law Offices Aug. 30, 2021

When writing a contract, you want to consider the potential changes in the future or the need for alterations to that contract. The more flexibility it has, the more you can do to resolve or even avoid a dispute.

One example is to include an escape clause, which may also be known as a release clause. This is often done in home purchase contracts, but it could be applied to many business contracts, as well. It gives one party-specific reasons why they can break that contract without penalty.

What Reasons Should You Consider?

For instance, you may want to consider things like changes in market conditions. If your contract is for a standing order of a specific product every month for the next two years, that may be wise as long as the product is in high demand. If the demand drops below a certain level, though, you may want to get out of the contract.

This doesn’t always have to be negative for both sides. Your reasoning could be that leaving the initial contract for that specific product allows you to purchase a new or updated product from the same vendor. No one has to lose. You can both have a greater level of success if you’re able to adjust your contract to fit the business’s current needs, rather than being forced to buy a product you no longer need or something of this nature.

That being said, all of the clauses in the world cannot prevent all contract disputes. They do happen, and you need to know what legal options you have if you get involved in one.