How to terminate a contract and end the agreement terms.
Contract termination can be a challenge. Learn what situations can help you terminate a contract you no longer want.
A contract is a legally binding agreement tying the signees together — however, sometimes you may need to get out of an established contract. In these cases, it’s essential to handle the contract termination correctly to avoid potential lawsuits. These tips can help you terminate a contract.
Termination contract meaning.
Before you go through with the contract termination process, it’s important to be fully aware of the contract termination's meaning and purpose.
When either party in a contractual agreement wants out, a contact termination is normally sought. A true termination is done before any fulfillment is made from the providing party.
Generally, the contract that was signed prior to the termination will have terms and conditions that have to be adhered to in order to protect everyone’s interests during contract cancellation. Be sure to review these with a lawyer to help to ensure no additional liability is incurred.
Look for termination clauses.
As mentioned above—Many contracts include terms for how the parties can terminate them. If your contract has them, it can be relatively easy to get out — simply check if the termination clauses apply to you and inform the other parties.
Improper contract cancellation can result in thousands of dollars in fees and an unwanted court case.
Identify breach of contract.
You can void most contracts if one of the other parties has failed to honor their established obligations. If you can identify and prove a breach of contract, you can terminate the agreement. Have a lawyer help to protect your interests and ensure accuracy in this step.
Claim impossibility of performance.
If you can’t reasonably fulfill your obligations under the contract, you can try to claim contractual impossibility. This isn’t usually a recommended approach — you’ll have to prove the impossible conditions are due to the other party’s actions or an act of nature.
Declare frustration of purpose.
Every contract serves a purpose, and if that purpose disappears — or is “frustrated” — you can terminate the contract. For example, you can terminate the lease if you rented out your house while you worked overseas, but social upheaval forced you to return home.
Negotiate with your partners.
You may be able to solve your problems with an honest discussion. Explain to your partners why you want out of the contract, and they may oblige you. You could even offer an incentive, like a cancellation fee, to sweeten the deal.
Write a termination contract letter
A contract termination letter allows you to give written notice of your contract’s cancellation. It clearly states intent and limits your liability, which arerequired if you’re looking to avoid issues while terminating a contract.
Writing the letter is simple. Here are a few steps to help make your experience a success:
- Include your heading information. This includes the date of creation and recipient and sender information.
- Get specific. Create your statement of intent for contract cancellation. It’s best to be as specific as possible, citing particular reasons or pertinent dates as appropriate.
- End with an end date. Explicitly state the date that you intend to halt the contract.
While you can send your contract termination letter through traditional postal services, it’s best to send it certified so that you can guarantee your recipient gets it in a timely fashion.
How to end a contract early.
The best way to end a contract early is to speak with the party you’re in contract with. Simple negotiation is often all it takes to reach a favorable resolution.
If they don’t agree to ending the contract early, consider getting a lawyer to help you determine your next best step.
Share termination notices quickly.
Timeliness is essential when terminating contracts. Digital documents make it fast and easy to send both salescontracts and termination notices. With Acrobat Sign, you can share documents with multiple recipients, make e-signatures, request and track e-signatures, fill and sign agreements, and more.
Discover how Adobe Acrobat Sign can help you smoothly handle all your contracts.
