I don't know about other registrars, but NetSol does have the mechansim to cancel or delete a name registration. Although the actual deletion may take some 6 months or so to materialize, ironic enough.
If you do come across some "liability" situation, you may want to contact your registrar (whether they have an explicit domain cancellation procedure or not). Make sure you do it FORMALLY (by e-mail or even trackable courier/registered snail mail) and jot down the time-line of your request and their reply. This will be very useful when you are asked to prove against your "bad faith". Hope this helps.