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Cancellation Clause
A cancellation clause is the section of a contract that describes circumstances in which each party may cancel the agreement as well as other details regarding cancellation. A cancellation clause is often found in many contracts, including real estate agreements. For example, when a buyer makes an offer on a property, that agreement typically has a cancellation clause that allows the buyer to cancel the agreement within a certain number of days if the property inspection report comes back with negative results. Parties to an agreement would need to submit a cancellation notice within the time frame stipulated in the cancellation clause in order to be in compliance with the agreement terms. Before signing agreements, it is wise for parties to pay special attention to that section of the contract in order to find out what options they have if they decide to cancel.