A Contract Termination Letter is a formal document that informs one party to the agreement of another party’s intention to terminate the contract ahead of the scheduled termination date.
- Notice of Termination of Contract.
When things are not working out and you are dissatisfied with another party’s performance or you simply do not require their services anymore, sending a Notice of Termination of Contract formalizes the cancellation of your deal. It can be used to terminate business deals and any business contract between individuals and entities alike.
If you need a Contract Termination Letter template, you may download a ready-made document below.
Contract Termination Types
There are two types of contract termination:
- Termination for cause, also known as a termination for default. This option is available only in response to a material breach committed by the other party. The contract itself may state what qualifies as a material breach or the parties can choose to act under the principles of the contract case law. In most cases, contracts are terminated because of a failure to pay or provide services on time;
- Termination for convenience. One or both parties may decide to terminate the agreement without specifying a reason for doing so. When a contract is terminated for this reason, it is not necessarily done as a response to poor performance and not because the other party breached the agreement. However, you can exercise this option only if your original contract provided such an opportunity. Otherwise, quitting a contract single-handedly will be considered a breach of contract on your part.
How to Write a Contract Termination Letter?
Are you uncertain what you should include in a Contract Termination Letter? Below you can find instructions that may help you compose a Termination Letter in a formal and neutral tone, with the chance to maintain a cordial relationship with the other party:
- Write down the actual date, name, and address of the other party.
- Inform the other party that you will not renew your original agreement – you must be clear and concise to not leave any room for misinterpretation. Indicate the date your original agreement was signed.
- State the reason for non-renewal, unless termination for convenience is possible.
- Ask the other party to acknowledge this notice. Make sure they know how to contact you if there are any questions or open-ended issues to be further discussed.
- Be grateful for the opportunity to work with your counterpart and express a wish to do so again in the future.
- Sign the notice.
How to Respond to a Termination of Contract?
Once you receive a letter to terminate the contract, consider composing a Termination Acceptance Letter. It is a written response to a termination letter that will help you end your contractual relationship in the most professional and dignified manner. It can also be a way for you to convey significant information or business offers.
Here are some tips that will help you respond to a Notice of Termination of Contract:
- Add details that promote your business to secure future business contracts and dealings with the addressee;
- Express disappointment for the termination but also mention your sincere appreciation and gratitude for business projects you have jointly made and the opportunities you pursued with the addressee. Avoid venting your frustrations by using polite and decent language;
- State your contact information to ensure continued communication;
- If certain issues must be discussed in person, invite the individual to talk and receive closure;
- Thank the person to whom the letter is being addressed, express hope for future cooperation, and sign the document.
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