Articles > Contracts

Ending A Contract With A Deed Of Termination

July 15, 2021   Philip Evangelou

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

If you need assistance with a Profit Share Agreement or any other commercial law issue, contact our team of commercial lawyers via the form on this page or by calling 1300 337 997

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.