How a Contract can be Terminated?

The status of a contract may be unclear. Other factors may be in play and the waters have been muddied, and you may now be questioning how to apply the words of your contract.

There are several ways in which a contract can be brought to an end.

Of course, the first place you should look is the termination provision within your contract.

In accordance with your contract

A contract may allow a party or both parties to elect to bring it to an end, for no specific reason. If that is the case, understanding the notice requirements will be incredibly important.

Termination for breach of contract

This occurs when one party is in breach of contract and such breach puts the other party in a position where they are entitled to terminate the contract.

This can either be pursuant to a contractual right to terminate or under the common law, where a breach is so serious that it goes to the heart of a contract, such that it is considered to be a repudiatory breach of contract.

Discharge by agreement

It is possible that parties might agree to bring a contract to an end and in doing so, their obligations under the contract are released. This could also come into play when there is a partial release, where the parties vary their obligations rather than discharge in full.

Recission

This occurs when there has been misrepresentation (fraudulent, negligent or innocent), undue influence or duress. Such actions may entitle the other party to terminate the contract. Recission of a contract should put the parties in the position that they were in before contracting.

Force majeure

Force majeure is an unexpected circumstance outside of a party’s control that has stopped that party (or both parties) from being able to comply with the terms of a contract and their contractual obligations. Such event may be provided for within a clause in a contract, allowing the contract to be terminated as a result.

Frustration

This occurs when something happens (with no fault attributed to either party) following the commencement of the contract term which stops one party or both parties from fulfilling their obligations under the contract or changes the obligations on one party or both parties to a point where it is now a different obligation than the one they agreed to at the commencement of the contract.

Void contract

If there is a mistake or some other reason why the contract is void, it will be treated as though such contract was never in existence.

Should you need any advice on the status of a contract or the termination of a contract please contact our commercial litigation team here without delay.