Q&As

Can I terminate a contract on reasonable notice?

read titleRead full title
Published on LexisPSL on 31/01/2018

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can I terminate a contract on reasonable notice?
  • How is ‘reasonable’ notice determined?
  • What happens if reasonable notice is not given?
  • What if the agreement is perpetual?
  • How should notice be given in the absence of notice provisions?

In answering this Q&A, we have taken into consideration what steps a party needs to take to terminate a written contract that does not contain any termination provisions. We have assumed that the agreement does not have a specified term.

In the past, there was a rebuttable presumption that if a contract had no provisions about term or termination, it was permanent and irrevocable. However, the courts now tend to look at the agreement to see what the parties' intention was. The general rule is that a contract can be terminated on reasonable notice (except for certain statutory exceptions where relevant legislation sets notice provisions, for example, termination of commercial agency arrangements).

How is ‘reasonable’ notice determined?

What determines reasonable notice will depend on the circumstances. In Martin-Baker Aircraft Co v Canadian Flight Equipment, it was established that ‘reasonable notice’ will be determined on the basis of the facts at the time of notice, not at the time the contract was entered into (even though the courts see this to be relevant).

In Hamsard 3147 Limited v Boots UK, the courts considered whether nine months was a reasonable notice period. Norris J confirmed the following principles which should be taken into consideration when determining a reasonable notice period:

  1. each decision turns on its facts

  2. general circumstances and practices of the trade may be relevant

  3. what amounts

Popular documents