Escape clause

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Contract law
Formation
Capacity Offer and acceptance Meeting of the minds2 Abstraction principle4,5 Posting rule1 Mirror image rule Invitation to treat Firm offer Consideration1,4 Implication-in-fact Collateral contract
Defences
Misrepresentation Mistake Threats and unequal bargaining power Illegality and public policy Unconscionability Culpa in contrahendo2 Force majeure Frustration of purpose Impossibility Impracticability Hardship Set-off Illusory promise1 Statute of frauds1 Non est factum1 Unclean hands1 Accord and satisfaction1 Exculpatory clause
Interpretation
Parol evidence3 Contract of adhesion Integration clause Contra proferentem UNIDROIT Principles
Dispute resolution
Choice of law clause Forum selection clause Hague Choice of Court Convention Arbitration New York Convention UNCITRAL Model Law Mediation Singapore Mediation Convention Enforcement of foreign judgments Hague Judgments Convention
Rights of third parties
Privity of contract1 Assignment Delegation Novation Third-party beneficiary
Breach of contract
Anticipatory repudiation Cover Exclusion clause Efficient breach Deviation Fundamental breach
Remedies
Specific performance3 Money damages Liquidated, stipulated, or penal damages3 Rescission
Quasi-contractual obligations
Promissory estoppel1 Quantum meruit1 Unjust enrichment Restitution Negotiorum gestio2
Duties of parties
Duty of honest contractual performance (or doctrine of abuse of rights)6 Duty of good faith (also implied covenant of good faith and fair dealing or duty to negotiate in good faith)7 Contract A and Contract B in Canadian contract law6
Related areas of law
Conflict of laws Commercial law
By jurisdiction
Australia Canada China (mainland) Ireland India Saudi Arabia United Kingdom England and Wales Scotland United States
Other law areas
Tort law Property law Wills, trusts, and estates Criminal law Evidence
Notes
1 Specific to common law jurisdictions 2 Specific to civil and mixed law jurisdictions 3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions 4 Specific to the German Bürgerliches Gesetzbuch and other civil codes based on the pandectist tradition 5 Explicitly rejected by the UNIDROIT Principles of International Commercial Contracts 6 Specific to Canadian contract law both in Québec and in the country's common law provinces 7 Specific to civil law jurisdictions, the American Uniform Commercial Code, and Canadian jurisprudence in both Québec and the common law provinces pertaining to contractual and pre-contractual negotiation
v t e

An escape clause is any clause, term, or condition in a contract that allows a party to that contract to avoid having to perform the contract.

If an agreement was drawn up for the sale of a house, for example, the purchaser could include some kind of escape clause in the contract, which will allow him to "escape" from the contract without being liable for breach of contract.^[1]

A "Subject to a builder's inspection to purchaser's full satisfaction" clause is one example of an escape clause. This clause effectively allows the purchaser to "escape" from the contract if an inspection reveals any irregularities or defects.^[1][2]

Another example is the "Subject to 30-day due diligence" clause, which effectively gives the purchaser a 30-day buffer period to inspect any and all aspects of the property before having to commit to the purchase.^{[citation needed]}

A 72-hour clause is an example of a seller's escape clause that may appear in real estate contracts.

The finance contingency clause makes the purchase offer contingent upon either the buyer or the property or both qualifying for the loan or mortgage the buyer will need.

Escape clauses, although fulfilling a real and sincere purpose in contracts of all kinds, have the potential of being abused.^[2]

For example, the "Subject to a surveyor's inspection to purchaser's full satisfaction" clause mentioned above can be abused if the buyer contracts a surveyor and instructs then to find some kind of fault in the property. The buyer, in other words, takes advantage of the escape clause to cancel the agreement to buy because he has buyer remorse, rather than because there is something wrong with the property.^{[citation needed]}

Escape clauses that require a purchaser or an expert representing the purchaser to be satisfied with the goods or services being purchased, have been challenged in lawsuits as invalid for lack of consideration.^{[citation needed]} The argument is that a party can always escape such a contract by merely claiming to be dissatisfied. Therefore, there is no real requirement for that party to perform their obligations under the contract (to pay for the goods or services), and an agreement that only requires performance by one party is an illusory promise, void as a contract.^{[citation needed]} Instead, such an agreement constitutes a gift from the performing party to the non-performing party.^{[citation needed][clarification needed]}

Courts^[where?] have generally held, however, that an escape clause containing a requirement of satisfaction nevertheless creates an enforceable contract, because a court could determine whether a claimed dissatisfaction was or was not reasonable, and therefore feigned to avoid the contract.^{[citation needed]}

International trade agreements tend to include at least one form of escape clause.^[3] Common escape clauses include countervailing duty penalties, antidumping statutes, national security exceptions, infant industry exceptions, balance of payment exceptions, and safeguard clauses.^[3] Escape clauses tend to be attractive in the drafting of trade treaties because they give political leaders flexibility to implement trade protection if there is domestic pressure to do so.^[3]

• Break clause
• Force majeure