How to terminate a contract? This video sets out the process for how you can terminate a contract.

Terminating a contract. Eek! What are you gonna do? All right well, stick around and I’ll tell ya.

Hello, Simon here from The Contract Company. Contracts it’s what we do all day every day, and sometimes overnight, Lucky us! And that’s true. Contracts are interesting.

Right, you wanna terminate a contract right. Now, the reason I said “Eek” is because it is one of the areas of law where you really are exposed if you get it wrong.

So let’s just step back.

How to Terminate a Contract

How do you terminate a contract? The key thing in terminating the contract is to look at the actual contract and examine the termination clause.

Now most of those sorts of clauses, because we’ve seen hundreds, most of those clauses will set out a process of things you have to do.

Usually, you have to provide notice, one in writing and of a certain time period, 30 60 90 days of notice. The first thing you have to do often is send that notice to a key person that’s specified in the contract.

So it might say that if you want to issue a formal notice under this contract, then that notice has to go to, you know joeblow@example.com.au or whatever the email address is.

So that’s the thing you need to do. You need to absolutely follow the process in the contract.

Now whether you can actually terminate the contract. Well, there is some case law that talks about, you know you’ve gotta act in good faith and that sort of thing.

I’m not gonna talk much more about that because the Case law is unsettled on the subject and I don’t know much about it and it’s all a bit complex.

An Act of Repudiation

So then the key reason I say this is a risk is that if you terminate the contract, and you have, you believe the right to do it under the contract. But it turns out you’re actually wrong, either you stuff up the process, or you didn’t have the right under the contract to terminate. Then your “act” of termination is actually deemed by the court to be an act of repudiation.

This means that you’ve given the other side an intention or a clear indication that you no longer want to be bound by the contract.

Now that means that they can terminate the contract on you. This is because you have now been found to have repudiated and make them seek damages from you.

See what I’m talking about?

I don’t like to scaremonger. But I would seriously say this is one of the areas of law where you probably wanna get some help.

Now whether it’s from me or someone else, you do what you need to do. Just don’t stuff this one up all right? ‘Cause if you get it wrong, big biggy’s at stake.

Anyway any questions, please give us a call. Simon@contractcompany.com.au 1800 355 455. Thanks very much.

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