Reneging refers to a situation where one party goes back on a promise or breaks an agreement or contract that they had previously accepted. Every day, individuals and businesses enter into verbal or written contracts that they are expected to abide by the terms of. However, there are situations when one party may decide to renege on an agreement against the wishes of the other contractual party.
For example, a party that had entered into a contract to supply internet services for the next two years can renege on the contract when they file for bankruptcy before the contract is terminated. However, if the internet service provider breaks the agreement on the ground that one of the directors is unsatisfied with the terms of the contract, the customer can sue them in a court of law and seek damages for any losses incurred.
Reneging on a Contract
When a business decides to renege on a contract, it should only do so when there are compelling grounds for not honoring the contract. If there are no complications or difficulties in meeting the terms of the contract, one should avoid breaking the agreement and thereby subjecting yourself to potentially getting embroiled in legal disputes that may result in the business having to pay huge sums in damages.
If a business is in a contract that it no longer wishes to pursue, it can try the following alternatives to breaking the contract:
1. Cooling-off period
A cooling-off period is a period when an individual or business is allowed to renege on an existing contract without having to deal with the consequences of contract cancellation. The Federal Trade Commission allows a cooling-off period of 72 hours for purchases made at a temporary business location (such as an exhibition or trade show).
Also, there are states that allow their residents to renege on a contract within three days of signing it, as long as the contract documents contain a clause allowing such actions.
If a contract is entered into due to the threat of force or intimidation, the contract is not legally binding, and the party can opt out of the contract without any legal consequences. A party can also opt out of a contract if, at the time of entering into the contract, the other party intentionally misrepresented some material information about the contract or omitted certain material information that is deemed important to both parties.
3. Breach of contract
If one of the parties in the contract breaches one of the agreements in the contract, the other party can use that as a legal ground for reneging on the contract. For example, if the contract was for the delivery of machine-cut stones at a construction site, and the seller fails to deliver by the agreed date and has shown no commitment to making the delivery, the buyer can cancel the contract. In such a case, the seller cannot seek damages from the buyer for opting out of the contract.
Reneging on a Job Offer
Reneging can also apply in the workplace when a candidate turns down a job offer that they had previously accepted. Taking into account what may be a long and tedious hiring process, rejecting a previously accepted job offer is a difficult experience for most people. As long as the candidate has not signed an employment contract with the employer, there are no legal consequences for reneging on the job offer.
Here are some considerations you can make when turning down a job offer you had accepted:
1. Read through the contract
Before turning down an offer you had accepted, you should read through the contract to make sure that there are no legal repercussions from turning down the offer. Some employment contracts usually provide a timeline when an employee can rescind on the job offer or provide a notice of their intentions to reject the job offer. After the expiry of the allowed period, the employer can take legal action against the employee.
2. Form of communication
Rejecting an already accepted job offer is a delicate issue since the employers spend a lot of time and resources in the recruitment process and rejecting the job offer would be taking them a few steps back. The best way to handle the situation is to communicate your decision in a formal way, either in person or via phone so that you can explain to the employer your reason(s) for rejecting the offer.
This enables you to maintain a positive relationship with the employer, leaving the possibility open of working for them at some point in the future. If you don’t want to speak to the employer on the phone or in person, then you can send a formal letter that explains your reasons for rejecting the job offer.
3. Be straightforward and concise
When communicating with the employer about your change of heart, you should be straightforward and state the specific reasons for your decision. Whether it’s a family situation or a better job opportunity elsewhere, you should inform the employer of your reason, but without getting into too many details.
Also, when communicating your decision, you should be courteous. Avoid using insulting or vulgar language. If the reason for reneging on the job offer is another better-paying job, the employer may try to renegotiate the terms of their job offer to tempt you to commit to working for them. Make a decision beforehand regarding whether you’re willing to reconsider the job offer, and what terms you would be willing to accept. If an employer is willing to “bid” more for your services as an employee, there’s no reason not to use that to your advantage, negotiating the best employment deal possible.
4. Understand the consequences
Turning down a previously accepted offer comes with its own consequences, which you should be ready to face. Depending on how you communicate the decision, you may have a hard time getting a job with the same employer in the future.
The employer may also contact other recruiters to discourage them from recruiting you into their company. Approach the conversation with civility and express your gratitude to the employer for offering you an opportunity.
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