Getting out of an Agreement in Pennsylvania, Cancel it!
Our Pittsburgh litigation lawyers know one thing: nobody wants to litigate a contract dispute, but sometimes it’s worth challenging an agreement, if you can void the agreement, cleanly. Maybe you agreed to pay thousands for home improvement, but are having second thoughts. Or, you signed a non-compete with a current employer, but now you want to go work for another employer. There are many examples. However, there are four main instances where it’s relatively easy to rescind an agreement without liability for breach of contract.
Here they are:
- Consumer contracts involving stuff sold over the phone or door-to-door,
- Home Improvement contracts,
- Any contract containing an opt-out provision,
- Non-compete agreements involving low level workers – such as run-of-the-mill salespeople, tradesmen, or other “worker-bee” type employees.
Let’s go through these in order, starting with sales done by phone or door-to-door.
1. Phone and Door-to-Door Sales
At your front door: “Knock knock.”
“Who’s there?”
“Sales guy.”
You: “Sales guy, who?”
“Sales guy, who can’t pressure you too hard into a contract, because it can be voided within three days.”
Pennsylvania has enacted the Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”), which protects consumers from over aggressive door-to-door sales. The UTPCPL gives consumers the right to cancel a contract within three days of signing it. This also applies to sales made over the phone, when a consumer feels buyer’s remorse. However, the UTPCPL only governs consumer contracts, not commercial contracts. So if your business gets a visitor from a salesperson — in person or over the phone — and your business buys goods or services, there is no three day grace period to rescind (or void) the contract. The same goes for purchases to update the rental property you own.
2. Home Improvement Contracts
Every home improvement contractor in Pennsylvania must strictly comply with PA’s Home Improvement and Consumer Protection Law; otherwise, the contract is voidable by the homeowner. That said, there are a few things to unpack here. First, this only applies to true “home improvement” of an existing home, not the purchase of a new home. That said, it does cover rental property, so long it has no more than two units and you live in one. Here, the homeowner may void entire contract if the agreement fails to contain — in writing — any one of the following:
- a start date
- end date
- total price
- modifications (ever modification needs to be in writing),
- reference to liability insurance, and a dozen other things.
In truth, few, if any, home improvement contracts follow HICPA. Thus it’s relatively easy to get out of many kinds of home improvement contracts. These include: additions to homes, new kitchens, baths, a garage, driveways, swimming pools, HVAC and solar energy systems, security systems, flooring, a patio, fence installation, a gazebos, new or renovated shed, windows, awnings and even waterproofing. However, even though you can void the agreement and ask the contractor to stop working, you may need to pay the “quantum meruit” value (cost of materials) he added to the property, minus any damages he caused.
So, for example, let’s say you agreed to pay a contractor 10K to add a new deck to your home, and he buys materials and does 4K worth or work, you can fire him, and only pay 4K, if he violated HICPA. You might have some legal wrangling, and the contractor may threaten a mechanic’s lien, but it’s unlikely you’ll have to pay the full 10K if you fire him, even if done arbitrarily, especially if you have to remediate some damage he caused, tipping over a paint can, or otherwise.
3. Contracts Containing Opt-Out Provisions
Pennsylvania treats contracts like a private piece of legislation between people or corporations, like a new law binding on the parties to it. Contracting parties can agree to almost anything, including ways to rescind or opt out of a contract in the future, assuming the contract is valid — there’s an offer, acceptance, and thing of value exchanged (consideration). We see opt out clauses in complex commercial cases. Often, a deep dive into a complex agreement can reveal exactly how to get out of it. It’s not common, but it happens. Contact a Pittsburgh lawyer at our firm to review any agreement, no matter how complex.
4. Noncompete Agreements Involving Low Level Workers
Pennsylvania strongly disfavors enforcement of a noncompete agreement, especially for workers not qualifying as decision or policy makers. A covenant-not-to-compete limits a person’s right to work to support himself and/or his family. The right to enter into contracts is a constitutional right, plus it’s the backbone of our free market system, where each party is entitled to the “benefit of the bargain.” However, a non-compete agreement is the only type of contract where a court may rewrite the entire agreement, if the court finds it would be unfair to enforce the contract.
Why is this so?
The non-compete — if entered as an order of court — can be used to physically restrain you from working for a competitor. This is something more than a simple money judgment against you, which you can void through a bankruptcy. Physical restraint, on the other hand, is a harsh limitation on your rights, almost like putting you in jail. Thus, the law grants a judge special powers to decline to enforce a non-compete, if it would unfairly restrict the employee’s rights as balanced against the employer’s right to protect its business.
Plus, the FTC is about to void all non-competes entirely; however, this will not happen until at least late 2024. Pennsylvania is about to enact its own ban on non-competes.
Moreover, the coming noncompete bans (in PA and by the FTC) will have no effect whatsoever on claims for theft of trade secrets. In fact, the coming FTC ban expressly takes into account an employer’s right to protect its “trade secrets” (such as a customer list) from being stolen. Likewise, an employer will remain free to ban outgoing employees from soliciting employees or customers.
Thus, a low level employee might have a relatively easy time beating a non-compete, he might still face issues if he engages in either (1) stealing a trade secret (or appearing to have done so at least) or (2) solicits any customer or employee of the current employer to leave with the outgoing employee.
Let’s Get Started!
Contact a Pittsburgh Lawyer about how to rescind or void any contract today!
