How to terminate a contract letter

Written by joelle ryssemus sullivan
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How to terminate a contract letter

A contract letter is a legal document designating agreed upon terms and conditions between two or more parties. Once signed or executed, all parties named in the contract letter are entitled to performance per the stated terms and conditions, including any clauses or sections regarding termination of the contract letter.

Skill level:


  1. 1

    Review the terms and conditions of the contract letter with careful attention to the details. Note paragraphs that reference termination, rescission, revocation or end date. Consult with an attorney if anything in the termination language of the contract is unclear or confusing. Many business documents are best understood with the help of an attorney.

  2. 2

    Determine the terms under which termination of the contract letter is permitted. For example, the contract may allow for immediate termination in the event of a material breach of its terms and conditions. Or the contract may have a stated end date included, as many business documents do, resulting in a natural point of termination.

  3. 3

    Assess whether the non-terminating parties to the contract letter are entitled to advance notice. Advance notice is the amount of time between tendering a notice of termination, or letter to terminate a contract, and the effective termination date. If the notice of termination is effective immediately then there is no notice period. The contract may specify a minimum number of days for a notice period.

  4. 4

    Determine if a terminating the contract will trigger any losses or penalties. For example, failure to give appropriate notice per the contract terms may trigger a penalty or loss of future profits. Consider the implications of terminating the contract letter if such a loss or penalty exists.

  5. 5

    Draft a letter terminating the contract. While there is no required format, it is best to refer to the contract by it's date of execution and name each party involved. Date the termination letter for formal notification purposes and state either a termination date or that termination is immediately effective. If the termination is supported by the contract terms, reference those sections in the contract and explain that the contract is being terminated "pursuant thereto."

  6. 6

    Sign the termination of contract letter and arrange for it to be delivered, per the notice section in the contract and by traceable means, to an appropriate member of each party. Recognise that some business service contracts have provisions that survive termination of the agreement, such as confidentiality requirements, and be certain to follow all such continuing restrictions.

Tips and warnings

  • This article contains general information about legal topics; it is not legal advice.

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