Ending A Contract With A Deed Of Termination

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Ending A Contract With A Deed Of Termination

July 15, 2021         openlegal

Regardless of the line of business you operate in, contracts will continually be entered into with various stakeholders – customers, suppliers, partners or many other parties. 

Sometimes ending a legally binding contract can be quite difficult, especially when the terms of a contract are strict. A deed of termination is a useful tool that helps prevent parties from future disputes that may otherwise arise as a result of termination of an agreement. 

What Is A Deed of Termination?

A Deed of Termination is a legal document which is signed by each party, confirming that a legally binding contract entered into previously is to be terminated. Usually a deed of termination involves the closing of a commercial relationship between parties, before the natural expiration date as set out in the contract. 

Depending on the circumstances of the relationship, a deed of termination will allow the parties to deal with their rights and responsibilities which are set out under the contract.  For example, a deed of termination will stipulate the payment of the money owing by either party. 

The Need For A Deed Of Termination 

When seeking to end a commercial relationship, using a deed of termination will enable the parties to be released from the contract without triggering potential termination causes which would arise if the relationship was ended without a deed. This may be beneficial to your business in many circumstances. For example, entering into a deed of termination with an employee means you don’t need to provide the employee with a settlement amount. 

What Does A Deed Of Termination Include?

A deed of termination usually includes terms relating to:

  • Release 
  • Date of termination
  • Final payments to be made 
  • Confidentiality obligations

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