Ready-Made Contract Termination Letter Templates

How to Write a Contract Termination Letter?

A contract termination letter is a document that states your intent to end all business relations with a business partner that you've entered a contract with. It also serves as a notice to the other party about the termination.

The website Tax Foundation said that in 2015, there are about 2.2 million firms that operate on partnership agreements. Written contracts are always a requirement in this kind of business setup. If you're an independent contractor or a real estate broker, you have to be prepared in case you want to terminate the contract anytime. That said, you need to write a contract termination letter.

If you have no clue in writing one, read our tips below.

1. State Your Purpose

Address your letter to the person you've agreed to a sample contract with. After the salutation, give your purpose for terminating the contract. You can ask the recipient to terminate the contract effectively or in a given time in the future.

2. Refer to the Terms

The approval of the contract termination depends on the terms of the contract itself. Refer to the agreement template and state which of these terms are applicable for the contract termination. Be specific in this part of your letter.

3. Keep Lines Open

Give your business partner a chance to ask about the contract termination. Put your contact information (phone number, email, landline, social media accounts) and the time of the day that you're available for such discussion.

4. Prompt an Action

Ask your business partner to reply to your formal letter in the soonest time possible. However, don't forget to thank him for his service while the contract was valid. Aside from that, always keep a polite and formal tone in writing the whole letter.

General FAQs

• What are the reasons for terminating a contract?

  The website Proven Resource stated that a contract is terminated for the following reasons:

  1. Contract terms and termination clauses - If there is no termination clause in the contract, it gets renewed immediately. 

  2. When one party is unable to perform his duties as stated by the contract. This lack of performance allows the other party to terminate the contract. 

  3. Negotiation - Both parties can negotiate the contract. If the decision leads to termination, then the contract is terminated. 

• Why is it important to read the contract before signing it?

  It's really important to read your contract before affixing your signature because you have to be aware of your rights as you enter the business. In case anything happens, you have a few clauses that can protect you. 
   

• What are the common ways to terminate a contract?

  The common ways to terminate a contract are:

  1. Termination by agreement
  2. Contract completion
  3. Breach of contract
  4. Impossibility of performance by one or both parties
  5. Contract rescission

• Is a contract legally binding?

  Yes, as long as it's enforceable in court then it is legally binding. 
   

• What is a breach of contract?

  A breach of contract takes place when one party doesn't fulfill his obligations in the contract. It can lead to a serious court battle.