Contracts are normally binding on both parties, and penalties apply to a party who unilaterally cancels a contract. Under certain circumstances, however, it is appropriate for one party to cancel a contract. Although the grounds for terminating a contract in Oregon are largely the same as in other states, Oregon contract law does contain certain special features.
If you purchase a condominium in Oregon, you may cancel the purchase by written notice within five business days of signing the purchase agreement. If you purchase a timeshare, you may cancel the purchase via written notice within five calendar days of signing the purchase agreement. If you are a real property owner and agree to the construction, improvement or repair of real estate, you may cancel the agreement by written notice before midnight of the following business day.
If you sign a contract and later discover that the other party misrepresented a fact concerning the transaction, you might be able to rescind the contract. The deciding factor is whether the misrepresentation is so serious that you would not have signed the contract in the first place if you had known the truth from the beginning. If you rescind the contract, you must return to the other party any benefits you obtained under the contract -- if you purchased a watch, for example, you must return the watch, but may claim a full refund of the purchase price.
Certain classes of people are entitled to rescind a contract, no matter its terms. If you are under 18, for example, you may rescind any contract that you sign, although the other party has no right to rescind it without your consent. If you are mentally incompetent or if you suffered a disability at the time you signed a contract -- if you were severely intoxicated, for example -- you may choose to either rescind the contract or fulfill its terms.
If the other party commits a material breach of a contract, you may suspend performance of your duties under the contract and sue the other party for your damages. A breach is considered material when it is so serious that it undermines the purpose of the contract. If you agree to construct a building in exchange for monthly progress payments, for example, you probably cannot suspend performance if the owner pays you one day late. If the owner is one month late, however, his breach might be considered material, entitling you to terminate construction and sue the owner for damages.