HOW much would it cost you to end a contract? You might be in for a shock when you look into it because, when you signed the contract, you didn’t consider how to end it.
First, check if the wording includes termination – you need to comply with the exact wording of any termination clauses if it does. If not, give as much notice of termination as you can, otherwise a court will have to decide what is or isn’t reasonable.
Second, if the other side have breached the contract in significant ways that undermine it, you may have a common law right to end it. To allow you the right to terminate, this breach must be very serious – you must tell the other side clearly and quickly that you’ve decided to terminate because of the breach and bear in mind that that breach doesn’t automatically give you the right to end the contract.
Do consider how damages can be measured, and check if there might be surviving contract provisions that could hinder your business further down the line.
You might be fortunate enough to find that the other side is willing to release you from the contract or agree that it should end.
Most importantly, when it comes to new contracts, as business starts to revive, make sure that you:
Consider the strategic goal of the contract;
Check any standard terms on duration, notice, charges and termination are realistic for your business;
Balance the risks of termination against the benefit of contracting;
Try to negotiate a specific termination term; and
Put key dates in your calendar for providing notice to terminate.
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