It is tough to craft a contract termination letter because it is the end of a relationship between business partners. You may have had great rapport in the past, but something changed and now you must rescind any affiliation. Perhaps the situation is a bit easier in that the other person or business was not upholding the agreement, so you have no choice but to dissolve the partnership. Regardless of the situation, writing a letter to terminate a contract requires careful consideration and wording to avoid any legal hassles that could arise. To avoid missteps, you should consult our contract termination letter templates and use them as guides to help you put together a solid letter.Contract Termination Letter Template
Contract Termination Letter Template
Miles Simpson, owner of Bottom Bargain Bin wrote the letter below to end a contract. Bottom Bargain Bin is going out of business because Mr. Simpson is retiring, and a company that is completely revamping it bought the space. Due to this change, Mr. Simpson must end his contract with his vendors. In this letter, he is contacting Harry’s Hand Soap, which supplies his business with retail products to sell.
It is with regret that I inform you this letter serves as a 30-day notice to end our contract for the supply of hand soap from your business to mine. Our contract will officially terminate on October 30, 2017. This letter should meet the requirements we agreed upon when we entered into partnership on January 5, 2013.
I wish to express my extreme gratitude for your upstanding service and products as we have done business through the years. I would like to explain that I am ending the contract because I am retiring and have sold the building my business is in to a sub shop. They will not sell retail products, so there is not an option to transfer the contract to them.
Please note I will place my last order on October 13, 2017, and I will pay all outstanding invoices by October 30, 2017. If you have any questions or require further information, please contact me at 419-555-8787. Again, thank you for an outstanding partnership. It has been a pleasure to work with you.
How To Write a Contract Termination Letter
A contract termination letter is giving notification that a contract will end. It should focus on the requirements of the contract to provide notice, if any. It should also give the exact date of the dissolution of partnership. It should not leave any questions in the mind of the recipient as to what happens next or when the contract is ending. You should always extend the chance to answer questions or discuss the termination of the contract and offer a way for the recipient to contact you.
The letter should start with a greeting using the recipient’s name. Try to always address it to a specific person. You should then immediately state the reason you are writing. Offering an explanation is especially helpful if you have had a long-term relationship with the other party. He or she may wonder why you are ending the contract, and the reasoning can avoid hurt feelings. You may also provide some words of appreciation for the relationship if it was an especially good one that is ending through no fault of the other party. End the letter by offering the chance to contact you with questions and providing your phone number.
One of the most important things to remember when writing is that you need to honor the contract. If it requires a 30-day notice, such as that in the contract termination letter template above, make sure to note you are following that guideline. Feel free to use the template as a reference when writing your own letter.
What To Avoid in Your Contract Termination Letter
When drafting your contract termination letter, you should always keep it professional. Even if you have a friendly relationship with the other party, you want to avoid being too personal. Formality enables you to maintain the professional relationship and treat this like the legal situation that it is. Should there be any issues, a judge may subpoena the correspondence, so you want to show you were treating this relationship as a business arrangement and not leave any room for misunderstandings.
You should always include specific dates as well. For example, if you are ending a vendor contract, mention when you will place your last order and when you will pay all outstanding invoices. If you are ending an agreement to provide cleaning services, then state when the last date of service is and when you will pay for all outstanding invoices for the services provided. This clarification helps to avoid confusion and ensures you are both on the same page.
How To Follow Up After Sending Your Contract Termination Letter
Typically, you do not need to follow up on a contract termination letter. You handle any follow-up when you place your last orders and pay your final invoices. Your letter should provide all the information needed about when and why the contract will terminate, and if you have a well-written agreement, it should dictate what happens now that you have dissolved the partnership. These details negate any need to follow up or contact the other party for further communication. Because you provided an email address and phone number, if the others have questions or need to discuss anything with you, they can make contact and follow up.
Top 5 Contract Termination Letter Writing Takeaways
1. Extend the option to contact you with questions
In some cases, your request to terminate the contract may surprise the recipient. You want to give the person a chance to contact you and ask questions.
2. Address the letter to a specific person
Always address the letter to a specific person. This is generally your normal contact person at the company. You do not want the letter lost in the mail, and when you address it to a specific person, this is less likely to happen.
3. Maintain a professional tone
Remember that even if you are dealing with a small company or an individual, this letter is formal business communication. It must maintain a professional tone to ensure there are no misperceptions.
4. Give specific dates of when you will place your last order and pay your final invoices
You want to be specific so as not to leave any questions. Giving the specific date you will place your last order and pay your last invoice makes it easier on the recipient’s company to track payments and plan their distribution schedules.
5. Honor your commitment to place your last order by a specific date
If you say you will place your final order on Friday, then do so. Ordering before or after that date can lead to delivery issues. The other company may not see your order or may think it is an error and not fill it.