Under the Contract and Commercial Law Act you may cancel a contract and claim your money back where the other party to the contract:
- made it clear, by words or conduct, that they will not carry out or complete their part of the contract (repudiation), or
- made false or misleading statements which persuaded you to enter into the contract and suffer loss (misrepresentation), or
- has broken or will break an essential term of the contract that is very important to you (breach).
Also the effect of the false or misleading statement, or breach of essential term the breach means:
- the contract is very different to what was first agreed, or
- you end up having more responsibilities under the contract, or
- you end up losing benefits under it.
Whether a term is essential to you will be decided by the Court looking at the contract as a whole.
For cancellation to be effective you must make it known to the other party before you cancel that you intend to do either by words or by your conduct. Unless it is impracticable to communicate with them or you are unable to do so because of their unreasonable conduct. There is no particular form required otherwise or even that you have to give a reason.
Once you have cancelled the contract you don’t have to do anything further to complete the contract including payment of money. You are still entitled to recover damages or payment of money to compensate you for your losses.
Note: However if you know of the misrepresentation or breach and then agree to carry on with the contract then you lose the right to cancel the contract later. You have affirmed the contract.