Inform a party, or parties, that you wish to terminate an agreement they’d previously entered into using a notice of contract termination.
Updated May 27, 2023
Written by Ioana Gagiuc | Reviewed by Brooke Davis
In the life cycle of a business, the management has to reach agreements with various parties — including suppliers and service providers — for seamless business operations. These parties may decide to part ways after a while when things don’t work out, or you no longer need the other party’s services.
During such times, a Contract Termination Letter can come in handy, signifying the end of the business relationship.
Legal Templates lets you create a notice of contract termination within minutes to end any legally binding business agreements.
A contract termination notice is a formal letter informing a party or various parties that a business wishes to terminate an agreement they’d previously entered into.
This document states when the business relationship between the parties will end, creating a record that can be used if either party makes any claims.
A contract termination letter can be used to terminate a business agreement for various reasons, including:
A notice of contract cancellation doesn’t always signify a disagreement between two parties. It may serve as a courtesy to thank the involved parties for their contributions during the contract period.
For instance, the company may draft this formal letter if they don’t intend to renew an individual’s employment contract once they have fulfilled their purpose.
An employer or business may also terminate a contract if the other party lied or committed fraud when entering into the contract.
For instance, a company’s management may issue a contract termination letter if they discover a general contractor lied about being licensed, bonded, and insured when signing a construction contract.
Drafting a contract termination letter is simple. You can create your letter using our customizable contract termination letter template to cut ties with others in your industry. Always remember to be concise and professional when writing a contract termination letter.
Here are the crucial steps you should take when drafting an effective letter:
It’s essential to thoroughly probe the terms of the initial contract before drafting a notice of contract termination. Familiarize yourself with the clauses regarding how to end the contract.
It is critical to notify the right individual or company that their services or products are no longer required from a particular date. This helps to prevent misinterpretations that may lead to disputes.
Remember to address the other party using their full name.
A well-drafted contract should have exit terms stipulating how involved parties can opt out of a business agreement. Similarly, a contract termination letter should explain why you end a firm’s or person’s contract.
You should include the termination clause within the original agreement in your notice of contract cancellation.
During the termination of a contract, there may be other things that you may have to factor in, such as any benefits or compensation owed to the terminated party. Information from the original contract may support any obligations you or the other party must fulfill during termination.
For instance, a contract termination letter sample may include a clause stating a supplier must clear all outstanding purchase orders before the termination date.
You are also free to list any materials the other party should send or return, such as IDs and company phones. Make sure you use a bullet list for clarity.
When drafting a contract termination letter, there should be a point person the other party can contact in case they have any inquiries. Add the contact person’s name, job title, and email address or phone number to make this transition easier for all involved parties.
Whether a company or individual, it’s essential to thank them for their contribution. Use a polite tone to thank them for taking the time to read the letter.
Before sending a contract termination notice, proofread it to avoid any errors or omissions.
Create your contract termination letter today using our contract termination letter template.
Here’s a sample of a contract termination letter that you can use to end a business relationship:
A written agreement between two or more parties is considered a contract. It creates a business relationship between entities by setting obligations, expectations, rewards, and consequences.
If such an agreement ends, all parties should be able to exit the relationship amicably.
Here are several crucial pointers that you should consider when drafting a notice of contract termination:
As a business owner, you should adopt specific best practices when drafting contract termination letters. These practices make the entire process of ending a business relationship formal and respectful for all involved parties.
Remember, terminating a contract unprofessionally may hurt your brand’s reputation.
Use our document builder to guide you through the process of creating a notice of contract termination.
