{"id":2768,"date":"2022-03-30T00:28:44","date_gmt":"2022-03-29T23:28:44","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=2768"},"modified":"2024-05-07T05:28:15","modified_gmt":"2024-05-07T04:28:15","slug":"terminating-a-business-contract","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/commercial-contracts\/terminating-a-business-contract\/","title":{"rendered":"Three Key Questions to Ask Yourself Before Terminating a Business Contract in England and Wales"},"content":{"rendered":"\n<p>As a business owner, there may be times when you need to terminate your commercial contracts. If so, you must ensure that your contract termination is carried out correctly in line with your contract terms and must exercise due care. Wrongful termination can risk your business as the terminating party incurs liability for a significant financial sum to the other contracting party. This article will present three key questions you should ask yourself if you consider contract termination for one of your commercial contracts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">1.&nbsp; Do I Have the Right to Terminate the Contract?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Almost all business contracts <\/span><a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/termination-breach-clauses\/\"><span style=\"font-weight: 400\">contain a termination clause<\/span><\/a><span style=\"font-weight: 400\">, which states how and when to terminate an agreement. Alternatively, some companies will reach a mutual agreement to end the original contract to start a new contract with updated terms.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">A termination clause will explain the circumstances when your business can terminate the contract. For example, it will state:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400\">whether your company can serve notice immediately;\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">if your business needs to provide a reasonable notice period; and\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400\">the length of any notice period.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">However, some termination clauses can be vague or confusing when they try to cover all possible eventualities within the contract. If it is unclear whether your business has the legal power to terminate the agreement, you should obtain expert legal advice.<\/span><\/p>\n\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2022\/09\/06164254\/uk-startup-manual-290x410-1.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">UK Startup Manual<\/div>\n            <div class=\"body-text\">\n                <p>LegalVision&#8217;s Startup Manual is essential reading material for any startup founder looking to launch and grow a successful startup.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.uk\/uk-startup-manual.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">2. Does Termination Make Commercial Sense?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Even if you are reasonably confident that you have the <a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/termination-rights-protect-business\/\">power to end your contract<\/a>, you need to ensure that it makes good commercial sense for your business.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Suppose the other party has technically breached their obligations but has immediately apologised and promised to take action to avoid your business suffering financial loss. In that case, you may sensibly choose to give the other company a chance to rectify the situation rather than take immediate drastic action and end the contract, particularly if the other party is a long-time business partner.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, if the other party has knowingly breached the contract, and shows no remorse and intention to rectify it, it may make commercial sense to end the contract. In these circumstances, it is reasonable for you to suspect that they may breach the terms of the agreement again in the future, which could subject your business to repeated financial loss.<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div 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Is There Any Significant Risk to Terminating?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Terminating a contract can be risky, and some situations will give rise to an easier decision than others. For example, you may receive legal advice that the other party is \u201860% likely\u2019 to <\/span><a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/how-do-i-terminate-contract-for-breach\/\"><span style=\"font-weight: 400\">commit a material breach<\/span><\/a><span style=\"font-weight: 400\">, giving you the right to end the contract legally.&nbsp;In this case, you should weigh the commercial and financial benefits and risks of termination against the 40% chance of legal action by the other party against your business. This is important because if you lose a case and cannot show you had the legal power to end the written agreement, <\/span><a href=\"https:\/\/www.gov.uk\/make-court-claim-for-money\"><span style=\"font-weight: 400\">a judge will likely award<\/span><\/a><span style=\"font-weight: 400\"> legal costs and damages to the other party.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">There may be occasions where your business most likely has the power to <\/span><a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/terminate-business-contract\/\"><span style=\"font-weight: 400\">end a contract<\/span><\/a><span style=\"font-weight: 400\">, but after weighing up the pros and cons of terminating the agreement, you conclude that it is less risky to continue.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Terminating your business contracts can be risky, so you need to consider carefully before doing so.&nbsp;For example, you could lose all potential business with another party in the future, or the company might sue your business for wrongfully terminating the agreement. Whenever your business considers terminating a contract, it is helpful to weigh up the pros and cons before doing so, which may require your business to obtain specialist legal advice. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need advice on terminating a business contract, <\/span>our experienced <a href=\"https:\/\/legalvision.co.uk\/contract-lawyers-lp\/\"><span style=\"font-weight: 400\">commercial contract lawyers<\/span><\/a><span style=\"font-weight: 400\"> can assist as part of our LegalVision membership.&nbsp; For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents.&nbsp; Call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our <\/span><a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1665431586020\"><strong class=\"schema-faq-question\"><strong>What are common reasons for terminating a contract?<\/strong><\/strong> <p class=\"schema-faq-answer\"><span style=\"font-weight: 400\">Common reasons for terminating a contract can be, for example, where the other party has breached an essential clause of the written agreement or, alternatively, where the arrangement is no longer profitable or beneficial to one of the parties.<\/span><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1665431615992\"><strong class=\"schema-faq-question\"><strong>Can an agreement be terminated, and you still maintain a commercial relationship?<\/strong><\/strong> <p class=\"schema-faq-answer\">An agreement can be terminated in a way that maintains your commercial relationship. For example, some companies will reach a mutual agreement to terminate the original contract to start a new contract with updated terms.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"87813618e8\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/2768\" \/>            <input value=\"https:\/\/legalvision.co.uk\/commercial-contracts\/terminating-a-business-contract\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Three Key Questions to Ask Yourself Before Terminating a Business Contract in England and Wales\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As a business owner, there may be times when you need to terminate your commercial contracts. If so, you must ensure that your contract termination is carried out correctly in line with your contract terms and must exercise due care. Wrongful termination can risk your business as the terminating party incurs liability for a significant<a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/terminating-a-business-contract\/\">Continue reading <span class=\"sr-only\">&#8220;Three Key Questions to Ask Yourself Before Terminating a Business Contract in England and Wales&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13349,"featured_media":648,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"2521,2766,994,1854,1159,2212","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[37],"tags":[480,684,685,686],"class_list":["post-2768","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-contracts","tag-termination","tag-contractual-termination","tag-contract-terminate","tag-termination-clause"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Terminating a Business Contract | LegalVision UK<\/title>\n<meta name=\"description\" content=\"You must understand what to consider before terminating a business contract. 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He has particular expertise in Commercial and Employment litigation, as well as data protection and privacy regulations. He is a qualified Solicitor in England and Wales and has a decade of legal experience, including advocacy within civil courts and Tribunals. Tom specialises in civil and employment litigation. He has extensive experience in advising employers and companies as to the requirements of employment law and data protection rules, as well as day-to-day advice on smooth running from a commercial perspective. Qualifications: Professional Skills Course - Law, University of Law; Legal Practice Course - Law, College of Law; Bachelor of Laws, University of Southampton.","sameAs":["https:\/\/www.linkedin.com\/in\/tom-sutherland-72b4509b\/"],"url":"https:\/\/legalvision.co.uk\/author\/thomassutherland\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/commercial-contracts\/terminating-a-business-contract\/#faq-question-1665431586020","name":"What are common reasons for terminating a contract?","acceptedAnswer":{"@type":"Answer","text":"Common reasons for terminating a contract can be, for example, where the other party has breached an essential clause of the written agreement or, alternatively, where the arrangement is no longer profitable or beneficial to one of the parties.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/commercial-contracts\/terminating-a-business-contract\/#faq-question-1665431615992","name":"Can an agreement be terminated, and you still maintain a commercial relationship?","acceptedAnswer":{"@type":"Answer","text":"An agreement can be terminated in a way that maintains your commercial relationship. For example, some companies will reach a mutual agreement to terminate the original contract to start a new contract with updated terms.","inLanguage":"en-GB"},"inLanguage":"en-GB"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2768","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/users\/13349"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/comments?post=2768"}],"version-history":[{"count":8,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2768\/revisions"}],"predecessor-version":[{"id":187616,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2768\/revisions\/187616"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media\/648"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media?parent=2768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/categories?post=2768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/tags?post=2768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}