How to terminate an agreement

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • How to terminate an agreement
  • Termination—contractual and common law rights
  • Read the contract
  • Notice
  • Termination for breach—repudiation
  • Termination for breach—time of the essence
  • Termination for material breach
  • Overlap between termination for material breach and repudiatory breach
  • Termination for insolvency
  • Choosing a contractual termination right
  • More...

How to terminate an agreement

Termination—contractual and common law rights

As commercial lawyers, we are used to being instructed to advise in connection with the formation of a commercial relationship. Even if, like family lawyers drafting pre-nuptial agreements, we anticipate the consequences of the end of the relationship, it is only in more recent economic times that we are being asked more frequently how to break the relationship in the first place.

It is important to remember that rights to terminate a contract may arise at common law (for example, in the event of repudiatory breach) and under the express terms of the contract. Where an agreement is silent as to contract termination, in the event of a dispute, the courts will apply common law principles. To avoid uncertainty, parties often include express contractual clauses which provide for the termination of a contract. In general, contractual rights to terminate are in addition to, and not in substitution for, common law rights. Termination should not be attempted without fully understanding the different options available to a party and the consequences of attempting to terminate. This Practice Note provides a general introduction to the relevant concepts to be considered when thinking about termination.

For more detailed information on termination, see also Practice Notes:

  1. Repudiation

  2. Termination for breach of contract

  3. Drafting termination notices—contract breach

  4. Termination and expiry of contracts

  5. Time

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