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:
- Date of termination
- Final payments to be made
- Confidentiality obligations