Parties to commercial contracts may wish to exit their contractual arrangements for all sorts of reasons. In many cases, they will have included in their contract a right to terminate in particular circumstances, and a process for doing so. Even where there is no express right to terminate, parties may be entitled to terminate under the general law for a counterparty’s breach.
But termination is a drastic step and should never be taken lightly. If a party gets it wrong, it may itself be in breach of contract, giving the counterparty a right to terminate or claim damages or both.
In this eighth of our series of contract disputes practical guides, Tom Leech QC, Robert Moore and Gregg Rowan consider when a contract may be terminated and the implications of termination, and provide some practical tips for commercial parties.
If you would prefer a shorter version focusing on key practical tips, which may appeal in particular to business colleagues, Tom has also presented this 10 minute podcast.
The seven previous editions in the series, listed below, can be accessed from this page of our Litigation Notes blog:
- When do you have a binding contract? It may be more (or less) often than you think
- What does your contract mean? How the courts interpret contracts
- Pre-contractual statements: When can they come back to bite you?
- How far can you act in your own self-interest? The role of good faith in commercial contracts
- Endeavours obligations: How hard do you have to try?
- Defining your liability in advance: Liquidated damages, limitation and exclusion clauses
- English law contracts post-Brexit: What changes should commercial parties expect?