We're taught to keep our promises, but sometimes staying true to our word can be financially devastating. Clearly, you should never flake out on a promise to take grandma out to dinner. But if you've signed a lengthy financial contract with a gym, a cellphone company, a bank or a landlord, continuing to pay for a service or a product may no longer be feasible. For instance, perhaps you've just lost your job.It's times like those when everyone finds themselves asking that age-old question: Can I break my contract?Maybe, maybe not. But if you think you're going to have to try and extract yourself from a contract, remember the following:[See: 11 Expenses Destroying Your Budget.]Honesty is the best policy. If you simply want to stop paying for a service or product, that sort of frank answer might not get you far. But if there's a reason you can't pay – you're no longer employed or perhaps your time is being consumed by taking care of an ill parent or child – share that information. You may find that you'll get a break, says Marc Fitapelli, an attorney at the law firm Fitapelli Kurta, based out of New York City. Fitapelli says he once represented a client who signed a contract to purchase some property and put down a large deposit."After the contract was signed, he started experiencing serious financial problems related to a bitter divorce," Fitapelli says.His client realized he couldn't close on the property and found himself wishing he had that deposit back. Fitapelli's client explained his situation to the seller, who turned out to be sympathetic. Fitapelli says his client didn't get all of the money back and wasn't entitled to, but he did have much of it returned.[See: 11 Ways to Save Time and Money.]Don't be a jerk. That's always good advice, but in this case, along with explaining to the other party why you're asking to break a contract, be pleasant. You may be planning to break your contract regardless, but don't say that. Ask if you can break the contract; don't announce that you will. Give the individual or company a chance to be magnanimous. You may be pleasantly surprised."Empathy goes a long way in contract disputes. Someone is less likely to hold you to the terms you're bound to if they aren't angry at you," says J.R. Skrabanek, an Austin, Texas-based attorney who specializes in civil litigation.Try to negotiate. Maybe there's a compromise both parties can agree to. For instance, many people, when they're struggling to pay off a house or car, will refinance the terms of the loan, so that the payments are smaller. They'll generally pay more in the long run in interest, of course.Perhaps you can negotiate your way out of a contract, so that you're paying something but not everything.If you go the negotiation route and get a satisfactory result, "ask for something in writing if you can, or save any subsequent invoice that shows a zero balance owed," says Shaolaine Loving, an attorney in Las Vegas who specializes in family law and estate planning. In other words, you don't want the same party to come back later and claim you still owe money.Prove the other party broke the contract. This could be a sleazy move on your part if the other party has been perfectly reasonable, and you're just looking for an out. But if this is an individual or company that's been difficult to work with, and particularly if the other party's behavior is part of the reason you want to back out, then start scrutinizing the language in your contract."Obviously, the most arguable way to avoid penalties would be to find a way to say the other party breached the contract," Loving says. "For instance, if the home seller wouldn't allow showings or didn't correct any identified problems in time."[See: 10 Things Teens Should Know About Money.]Minimize the damage. You've explained to the other party that you're going to have to break your contract. You've been nice. You've tried to negotiate a way out. And you've been told that it doesn't matter – you still have to honor the contract.If you're going to go ahead and break it anyway, minimizing the damages you'll cause the other party may mean you're liable for less money if you go to court, says Tom Simeone, a trial attorney at Simeone & Miller, LLP, in the District of Columbia."For example, if you are going to breach a lease, if you give notice ahead of time and leave the premises clean and ready to rent, then a court will find that a landlord can and should relet it out within a few months and not award damages for additional months, even if your lease is for several more months," Simeone says.That isn't just optimistic thinking, according to Simeone."Courts routinely require plaintiffs to mitigate their damages, so anything you can do to minimize the other party's damages will reduce your potential liability," he says.Skrabanek seconds that. "If you break your lease, the apartment complex needs to show it's making a diligent effort to find replacement tenants. They can't just let your apartment sit vacant for months on end with no effort and claim you owe them for the money," he says.And there's always the chance you can break the contract without negative repercussions. That's a gamble, but possibly one worth taking if the money left to pay isn't all that much."If you breach it by failing to pay or otherwise perform, the other side simply may not pursue a claim against you because the cost of doing so – in terms of legal fees and other expenses – may not make it worth their while," Simeone says. "Few people file suit to collect a hundred dollars."10 Ways to Feel Better About Your Money.
