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A Letter Ending a Contract is used by one party to a contract when they need to formally notify the other party of their wish to terminate (ie end) the contract. Letters Ending Contracts ensure that proper procedures are followed when a contract is ended, to protect both parties involved.
Use this Letter Ending a Contract:
end a contract giving notice (eg for convenience, in accordance with the notice period set out in the contract)
end a contract immediately because of the other party’s default in the performance of the contract (ie a breach of contract), or
to give notice of a problem to the other party, to allow them a period of time to put it right before the contract will be terminated, and
only for contracts governed by the laws of England and Wales or the laws of Scotland
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Re: Notice of termination of the contract
The purpose of this letter is to give you formal notice of termination of the contract (Contract).
Introduction
Notice
Acknowledgement and Further Actions
Yours faithfully,
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This Letter Ending a Contract template covers:
identifying the contract and the parties
the type of notice being given (eg the legal basis being used to end the contract)
the period of time before the contract is to end
time allowed to remedy the problem (if relevant)
If you want to end a contractual relationship under a business contract that’s delivered on an ongoing basis, it’s a good idea to prepare a formal Letter Ending a Contract to deliver to the other party to the contract (eg your supplier or purchaser). Letter Ending Contracts can be used for contracts involving the regular delivery of goods, the supply of services, or another open-ended business relationship.
Using a Letter ensures that the process of terminating the contractual business relationship is properly documented. This documentation can serve as valuable proof that the correct notice period (if required) was given and can help the parties to avoid any potential disagreements about how the contract was ended.
A Letter Ending a Contract can also be used to provide notice if there is a problem (eg poor performance of services that are being supplied under a contract), whilst giving the other business an opportunity to put things right by a certain date to avoid termination of the contract. For more information, read Ending a contract.
There are a variety of possible reasons why a contract between two businesses might come to an end, including when:
the contract is for a fixed term or for a discrete project and it will naturally come to an end
the buyer (or seller) has found a new supplier (or purchaser) and needs to end the existing contract
one party is unsatisfied with the performance of all or a part of the contract by the other party, or
there has been a breach of one or more terms of the contract
If you want to end a contract in reliance on a force majeure clause (eg because an event has occurred outside of your control which is covered by the force majeure clause in your contract), you can use a Force majeure contract termination letter to do this.
The amount of notice that needs to be given will generally depend on the terms contained in the written contract. If the contract sets out notice periods for certain situations, these should be followed.
If there are no express terms regarding notice periods, or in the absence of a formal agreement (eg if you’re relying on a verbal contract), it is implied that 'reasonable notice' should be given. What constitutes 'reasonable notice' will depend on factors such as:
the degree of formality of the commercial relationship (eg whether there was a written contract in place)
the length of the business relationship
any dependence on revenue or supply, and
any common intentions displayed, or commitments made, at the outset of the contract
Certain material breaches of the contract (eg complete failures to deliver goods or services or failures to pay invoices within a reasonable amount of time) may give one party the right to terminate the contract without notice.
Some contracts provide that, where there has been a minor breach of the contract (eg if service provision has been slightly below specification), the offending party is given a chance to rectify the problem. In this case, a Letter Ending a Contract can allow for the termination to be cancelled (ie for the contract not to be ended) if the issue in question is satisfactorily resolved by a specified date.
Making your Letter Ending a Contract online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the information about the contract and your situation prepared in advance, creating your document is a quick and easy process.
You’ll need the following information:
The sender and the recipient
What are the sender’s (ie the party ending the contract’s) name, address, and legal structure? If it’s a company, what is its company number?
Who is the sender’s signatory, if it’s a company or a partnership? This is the person who will sign the Letter on the company’s or partnership’s behalf.
What is the name and address of the Letter’s recipient (ie the other party to the contract that is being ended)?
The contract
What is the contract name or reference (ie how will you identify the contract to which the Letter applies)?
On which date was the contract signed?
Contract termination
Is the contract being ended because the other party has breached the contract (ie they’ve failed to adequately perform their obligations under the contract) or for the sender’s convenience?
If for the sender’s convenience, which clause of the contract allows for termination for this reason (eg by giving a specified amount of notice without either party needing to be at fault)?
If the other party breached the contract:
What are the recipient’s relevant obligations under the contract?
How did the recipient default on their obligations under the contract? On which date did each default (ie breach) occur?
Can the recipient remedy the default (ie is there a notice period in the contract for remedying defaults and is this specific default capable of being remedied)?
If so, which clause of the contract allows for a remedy period and how many days does the recipient have to remedy the default?
If not, which clause of the contract allows for immediate termination in the event of defaults that cannot be remedied?
Are there any specific actions that the recipient needs to take after the contract ends (eg working with the sender to manage unfinished projects)?
The Letter
If the recipient is a company or a partnership, is the Letter addressed to the recipient’s managing director, a specific person that the contract specifies is to receive notices, or another person (ie job title)?
What is your correspondence reference for this Letter (ie the number, code, or phrase by which this Letter can be identified in future communications)?
On which date is the Letter to be sent?
When will the notice period set out in this Letter (ie to end the contract) start? This allows you to set a time period that takes into account postage times or similar.
Letters Ending Contracts inform the recipient of the sender’s intention to end a contract that both are party to. To do this, this Letter Ending a Contract template includes the following terms and sections:
Names, addresses, date and reference
The Letter starts with a standard letterhead structure, clearly setting out the parties to the contract (ie the sender and the recipient), their addresses, and the date of the Letter. The reference number or code the parties can use to identify this Letter is also set out here.
Re: Notice of termination of the contract
The body of the Letter starts with an identification of the Letter’s purpose: providing the recipient with formal notice of the sender’s intention to terminate (ie end) the relevant contract.
Introduction
Next, the parties to the contract in question are identified and the date of the contract, along with which party is expressing a wish to end the contract.
Notice
The content of this section will differ depending on the reason why the contract is being ended.
If the contract is being ended for a reason other than the recipient’s default (ie not because the recipient has failed to perform their obligations under the contract), the clause of the contract that allows the sender to end the contract in these circumstances is identified and it’s stated that the notice period specified in the contract itself is being given (ie the contract should end after that period of time has elapsed).
If the contract is being ended because the recipient has not adequately performed their obligations under the contract, this will be set out. The recipient’s relevant obligations under the contract are identified and how the recipient has defaulted on these obligations is explained. If the recipient has a chance to remedy their default (eg by improving performance), this is also communicated, along with the length of time the recipient has to achieve this and the fact that, if they don’t, the contract will then be ended. The clause of the contract allowing for such a remedy period is also identified. If no remedy period is available, this is noted and it’s highlighted that the contract is to end without a notice period on a specified number of days after the Letter is sent (eg 2 days, to take into account the Letter’s postage time).
Reservation of rights
This section will be included if the contract is being ended because the recipient is in default of the contract. It will set out the sender’s express reservation of their rights to claim any losses suffered due to the recipient’s breach of contract, under the contract and under the law more broadly.
Acknowledgement and further actions
This final section asks the recipient to acknowledge when they receive the Letter. It also sets out various things that the recipient should do if and when the contract ends. For example, return all of the sender’s property, destroy any confidential information relevant to the contract, and any other specified actions.
Yours faithfully…
The Letter ends with a space for the sender to sign and date before the Letter is sent.
If you want your Letter Ending a Contract to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review the document for you (or to make the changes for you) to make sure that your modified Letter complies with all relevant laws. Use Rocket Lawyer’s Ask a lawyer service for assistance.
Make sure you give the recipient enough notice
Complying with notice periods is a legal requirement. For example, if you’re party to a contract that requires 14 days’ notice in order to be ended in the absence of either party being at fault, make sure the recipient of your Letter Ending a Contract actually has 14 days’ notice from the time they receive your Letter until the time that you treat the contract as ended. Make sure you take into account service considerations, for example, postage times. Otherwise, you may be considered to have stopped performing your obligations under the contract too soon and, consequently, to have breached the contract before it ended (eg if you stop delivering services too soon).
Consider other options if you no longer want to be party to a contract
If you no longer want to be party to a contract (eg if you no longer want to provide or receive goods or services), consider other options before deciding to end the contract. For example, consider:
novating the contract using a Novation agreement - to end one party’s benefits and burdens under a contract whilst creating a new, otherwise identical contract with a new party. This could be helpful if, for example, you’re selling the part of your business that deals with the relevant goods or services provision
assigning the contract using a Letter assigning a contract - to transfer only the benefits of a contract to a new party. For example, if you no longer need a business’ services but you were happy with its service provision and want to transfer the contract to an associate’s business
varying the contract - agreeing on changes to the original contract so that the contractual relationship can be continued on different terms (eg if you want to continue providing services or goods but need to receive more money in return to meet your costs)
Comply with any restrictions imposed by a contract after it’s ended
It’s not uncommon for some provisions contained in commercial contracts to be intended to continue after the contract itself has ended. For example, terms preventing parties from disclosing each other’s confidential information or preventing them from competing with each other for a certain period of time. You should check your contract carefully for any such restrictions and make sure to abide by them - as long as they’re reasonable, they’re generally enforceable.
Understand when to seek advice from a lawyer
In some circumstances, it’s good practice to Ask a lawyer for advice to ensure that you’re complying with the law and that you are well protected from risks. You should consider asking for advice if:
there is no written contract in place
you are not sure whether the other party is in the wrong (ie whether they’ve breached the contract)
you want to make changes to the contract
you are in the wrong and you want to end the contract
you need help navigating clauses of the contract that continue to apply after termination
