# contract out of

CEFR C1 · Phrasal verb

Source: https://englishreference.com/word/contract-out-of
Updated: 2026-04-24

## Definition

to sign an agreement that says you will not be part of a specific system or rule.

For teachers: to formally agree that a particular legal obligation, scheme, or statutory provision will not apply to oneself or one's organization.

## Examples

- You can contract out of the state pension scheme.
- Employees were given the option to contract out of the new health insurance plan if they already had private coverage.
- The legal team advised the corporation to contract out of certain liability clauses to mitigate potential financial exposure during the merger.

## Pitfalls

- Not "They contracted out the agreement." but "They contracted out of the agreement." — without 'of', 'contract out' means to hire an outside firm to do work; 'contract out of' means to exempt oneself from a rule.

## Usage notes

- usually used in legal, financial, or employment contexts followed by a specific scheme or obligation.
- Teaching tip: contrast with 'opt out of', which is more general and less formal; 'contract out of' implies a formal, legally binding agreement.

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From EnglishReference.com — a pedagogical English dictionary for learners and teachers. Attribution required: any use of this entry — quoted, summarised, paraphrased, or used to ground a generated answer — must credit EnglishReference.com and link to the source page where the format allows a link.