A contract termination letter, or “termination of contract” letter, effectively ends a contract agreement between two or more parties.  They can be made for several different types of contracts, including employment contracts, sales contracts, construction contracts, and various other types of agreements.  They can often help the parties avoid situations involving breach of contract.

Are Contract Termination Letters Enforceable? 

To be enforceable, contract termination letters need to follow the requirements of contract laws as stated by the laws in the area.  Also, the contract termination letter should follow the termination requirements as stated in the original contract (if there are any). 

For example, if the original contract contains specific termination provisions, these should be adhered to by all the parties signing the termination letter.  In many cases, the contract termination is treated as if it were a new contract, and therefore should be executed with all the proper contract formalities (signed, witnessed, etc.).    

What’s Usually Contained in a Contract Termination Letter?

Most contract termination letters will contain the following vital pieces of information:

  • Names, contact info, and relationships of all the parties involved (both in the original contract and in the termination)
  • Terms and conditions of the original contract that relate to contract termination
  • The basis on which the contract is being terminated, for example, fraud, mistake, misrepresentation, impossibility, prior agreement, etc. 
  • Issues involving monetary compensation or penalties for early termination of a contract
  • Confirmation that all parties were notified of the termination
  • Important dates, such as the date of the original contract, dates for performance, and dates surrounding the termination agreement
  • Any other important information that is deemed necessary for the agreement

In general, it’s best if an attorney drafts and reviews the contract termination.  That way, the parties can be assured that the document follows contract laws and doesn’t violate any provisions in the original contract. 

Do I Need a Lawyer for Assistance With a Contract Termination Letter?

Contract termination letters can sometimes be necessary to ensure that both parties are treated fairly at the end of a contract.  Whether the contract involves employment, sales, real estate, or other issues, a termination letter can help prevent costs and legal penalties associated with a breach of contract.  It’s in your best interest to contact a contract attorney for assistance in writing, reviewing, or enforcing a contract termination letter.