There may come a time when you have to terminate a business contract. The best way to do this is with a business contract termination letter. A business contract termination letter minimizes potential damage, and protects you and the company.
As with any business transaction, you should follow a specific set of procedures to terminate a business contract. If you find yourself in the position where you need a business contract termination letter, here are some things to do and what should be added to the letter.
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Know if the circumstances behind your termination don’t contradict the contract’s conditions. Make sure you are aware of any obligations that might stall the action, such as a contractually agreed period of time before cancellation is allowed. There could be automatic renewal policies and long-term clauses. Talk with your legal representative right away and get an understanding of the consequences of terminating the business contract.
Utilize a Formal Format for the Termination Letter
For the purposes of clarity, what should be added to the termination letter has to be professional, concise, and to the point. You want to avoid any chance of misinterpretation. The letter should open right away with its purpose, to terminate a contract between yourself and another party. The second part of the letter needs to clearly state the reason for the cancellation. Be brief, be polite, and keep it neutral. The sole purpose of the letter is to terminate the contract, not inflame or insult. Close out the letter reiterating what was stated in the first paragraph.
If you owe the other party compensation, state the final check is enclosed. If you are owed money, ask for it to be delivered within a three day period of the letter’s receipt.
You want to keep a copy of the business contract termination letter. If there is any documentation going with the letter, make copies and keep the originals for your records. Your legal representative should review the letter before anyone signs off on it. Finally, send the letter by certified mail. It will give you a record of when the termination letter was both sent and received.
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