How to Terminate a Contract
To terminate a contract, review the termination clause for notice requirements and permitted grounds. Serve written notice in accordance with the contract terms, document everything, and ensure you fulfil any surviving obligations such as confidentiality or final payments.
Last updated: February 2025
Step-by-Step Guide
Review the termination clause
Read the contract to identify the permitted termination grounds, notice period, and any conditions precedent to termination.
- •Check for automatic renewal provisions.
- •Note any cure periods that must elapse before termination.
Identify your grounds for termination
Determine whether you are terminating for convenience, for cause (material breach), or by mutual agreement.
- •Document the specific breach or reason thoroughly.
Prepare the termination notice
Draft a formal written notice citing the relevant clause, the effective termination date, and the reason for termination.
- •Use the delivery method specified in the contract (email, recorded post, etc.).
- •Keep the tone professional and factual.
Serve notice and retain proof
Send the notice via the required method and keep copies of all correspondence and delivery confirmations.
- •Follow up with a read receipt or tracking number.
Manage post-termination obligations
Ensure final invoices are settled, confidential materials are returned, and any surviving clauses such as IP ownership or non-compete continue to be honoured.
- •Create a checklist of surviving obligations from the contract.
Legal Requirements
Contract termination must comply with the terms agreed by both parties. Under English common law, termination for breach requires the breach to be material or repudiatory. The Unfair Contract Terms Act 1977 and Consumer Rights Act 2015 may affect termination clauses in certain contracts.
Common Mistakes
Template / Example
When to Get a Solicitor
Seek legal advice if the contract is high-value, the other party is likely to dispute the termination, or you are terminating for breach and want to claim damages.
FAQ
Can I terminate a contract without a termination clause?
Yes, you can terminate for repudiatory breach under common law, by frustration, or by mutual agreement, even without an express termination clause.
What happens if I terminate a contract wrongfully?
You may be liable for damages to put the other party in the position they would have been in had the contract been performed, including lost profits.
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