When and how can you amend or cancel a contract?

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What you need to know if you want to amend or terminate a contract.

1. Contract amendment – when is it possible?

Under Article 1270 of the Romanian Civil Code, a contract may be amended only by the mutual agreement of the parties. Such amendments must be made in writing, in the form of an addendum signed by all parties. The addendum must comply with the same formal requirements as the original contract. This requirement is established by law to ensure clarity and legal certainty in contractual relations.

a) Amendment by mutual agreement of the parties

In most cases, a contract is amended by mutual agreement of the parties. Such amendments are a straightforward process whereby all contracting parties consent to modify a specific term of the contract. These modifications must be executed in writing, typically as a written addendum signed by all parties involved. The addendum must follow the same formalities as the original contract—such as signature requirements and notarization if originally required—to ensure its legal validity.

For example, in a lease contract, the landlord, and the tenant may agree to extend the lease term or adjust the rent. This is effected by executing an addendum that amends the original contract.

Important: The addendum must be signed by all parties and must observe the same formalities as the original contract. If, for instance, the original contract was executed under private signature or notarized, the addendum must follow the identical procedure. This requirement is essential to ensure the validity of the amendment.

b) Unilateral modification

In some cases, a contract may be modified unilaterally by one party, although such clauses are relatively rare and depend on the contract’s specific terms. For example, an electricity‑supply contract may include a clause permitting the supplier to adjust rates in line with market fluctuations. Even then, the supplier must give proper notice to the other party, and the scope and conditions of any such modification must be clearly specified.

Nota Bene: If the contract contains no express clause allowing unilateral modification, any attempted change can be challenged in court.

2. Cancelling a Contract – When Is It Permitted by Law?

Annulment of a contract entails its complete dissolution, rendering it null and void. Various circumstances can lead to the annulment of a contract. It depends on specific defects or irregularities present at the time of its conclusion.

a) Defects of Consent – Grounds for Contract Nullity

A contract concluded under the influence of defects in consent may be annulled. The affected party can seek annulment, requesting the dissolution of the contract. These defects compromise the validity of the consent at the time the contract was made, rendering the contract voidable.

1. Mistake. A mistake occurs when a party enters into a contract based on an incorrect belief about a fundamental aspect of the contract. For example, if a person purchases a product believing it to be of superior quality, but it fails to meet that expectation, they may seek annulment on the grounds of mistake.
2. Fraud (deception). Fraud involves intentional deception by one party to induce another into a contract. For instance, if a seller conceals significant defects in a property to secure a higher price, the buyer may annul the contract due to fraud.
3. Duress. Duress refers to situations where a party is compelled to enter into a contract through threats or coercion. If someone signs a contract under such pressure, it can be annulled because genuine consent was absent.
4. Undue Influence. Undue influence arises when one party exploits a position of power over another, leading to an unfair agreement. For example, if an individual takes advantage of another’s vulnerable situation to secure favorable contract terms, the contract may be voidable on the grounds of undue influence.

Limitation period for voidability. Seeking to have a contract annulled on grounds of a defect of consent must bring their action within three years. This limitation period begins to run from the date the contract was concluded. Or, if the defect was not known at the time of conclusion, from the date on which the party became aware of it.

b) Absolute nullity – Grounds Arising from Contravention of Mandatory Legal Provisions

A contract is absolutely null and void if it contravenes mandatory legal provisions intended to safeguard the public interest. For example, a contract with an illicit object—such as the sale of counterfeit goods or one that breaches labor regulations—is void ab initio and produces no legal effects.

Nota Bene: Absolute nullity cannot be cured by ratification or agreement of the parties. It may be invoked at any time by any interested party or declared by the court on its own initiative.

3. Termination breach of contract

Where one party fails to fulfill the obligations it has undertaken, the other party may request the termination of the contract. Depending on the nature of the non‑performance, this may be effected by way of termination or by rescission. Some contracts provide for their discharge through the procedures of termination or rescission as regulated by the Civil Code. Termination and rescission are grounds for bringing a contract to an end when one party fails to meet its obligations and the counterparty requests the cessation of the contract’s effects. These mechanisms do not presuppose any ground for nullity of the contract – the contract remains valid – but rather arise from a breach of the contractual obligations by one or both parties.

a) Termination of Contracts of Continual Performance

Termination applies to contracts of continual performance (e.g. leases, service contracts, employment contracts). Where one party fails to perform its contractual obligations, the other may elect to terminate the contract. For instance, in a services contract the provider must complete specified tasks within an agreed timeframe; if the provider fails to meet that deadline, the client may serve notice of termination. Accordingly, non‑performance of an agreed deadline may give rise to termination of the contract.

b) Termination of Contracts of Single Performance

Rescission applies to single-performance contracts, such as contracts of sale or gift. If one party fails to fulfil the agreed terms, the other party may seek to rescind the contract. This action aims to restore both parties to their pre-contractual positions, requiring the return of goods or compensation for any losses incurred. For instance, in a contract of sale, if the buyer fails to pay the agreed price, the seller has the right to terminate the contract and request the return of the goods.

Procedure: In cases of termination or rescission, the affected party must notify the other party of their intention to end the contract. This notification should adhere to the procedures outlined by law or specified within the contract, which may include notice periods or grace periods. In certain jurisdictions, specific contracts, such as consumer contracts, may have statutory rescission periods, like a three-day cooling-off period.

4. Contract terms and their importance

A crucial aspect of amending or terminating a contract is a thorough understanding of its specific terms. Many contracts incorporate clauses that govern:

Modification. Outlining how and when changes to prices, conditions, or other terms can be made.

Termination. Specifying the circumstances under which a contract can be unilaterally ended.

Penalties for default: Detailing consequences in the event of non-compliance or breach.

These clauses establish a clear legal framework, ensuring that the rights and obligations of each party are well-defined. This clarity helps prevent ambiguous interpretations and reduces the risk of disputes or litigation by providing explicit guidance in cases of misunderstandings.

Recommendations in case of Amending or Cancelling a Contract

When amending a contract, it’s essential to document the changes formally:

• Amendments: Used to modify existing terms within the contract.​
• Addendums: Employed to add new terms or provisions without altering the original content.

Both documents must be clearly written, referencing the original contract, and signed by all parties to be legally enforceable. Proper execution ensures that the modifications are recognised and binding.

Amending or cancelling a contract requires careful consideration due to the significant legal implications involved. These processes are vital to protect the interests and rights of all parties under the contract. If you find yourself needing to alter or terminate a contract, consulting a legal professional is advisable to ensure that your actions are compliant with the law and that your rights are safeguarded.

Amend or cancel your contract safely: Need clear legal solutions for your situation?
Amending or cancelling a contract may seem complicated. However, it is essential to protect your interests and rights. Whether it’s an addendum or court action, a specialized lawyer can guide you through the process.
A lawyer can provide you with:
✅ Legal advice on amending and cancelling contracts
✅ Assistance in negotiating contract terms and drafting additional documents
✅ Clarifying the legal options available to cancel a contract
✅ Court representation in disputes concerning the validity and performance of contracts
Don’t let contractual issues affect your legal and financial security!
Contact us to find the right legal solution for your situation!

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