Have you/your business entered into an expensive contract that you’d like to get out of early?
Termination of business contract
Perhaps you no longer need or can no longer afford the services? Perhaps you feel you’re not getting what you’ve paid for, or maybe you’ve got a better offer from someone else? What can you do?
How to terminate a contract
If the contract allows you to terminate early, then great.
All you need to do is serve a notice of termination in accordance with the contract and you’re done!
But what if you’re locked in for another 5 years or so? You can read our guide on contract termination but here are 2 angles you can explore in a bit more detail:
1: Are the services being provided to the required standard?
When you decided to enter into the contract you were most likely told what fantastic services you would receive. Are you getting them?
It may be that the services are set out in the contract or perhaps they are in a quote, proposal or order form. If the services are not being provided to the required standard, you may be able to argue that the provider/supplier is in breach.
Sometimes the breach itself can be so serious it’s what’s known as repudiatory. This means that you can decide to accept that breach and treat the contract as at an end. You could also claim damages.
This can be a very risky strategy however because if the breach was not sufficiently serious and you terminate, you will most likely find yourself in breach and that could result in you facing a claim for the balance of the contract sum!
Please also be mindful that some contracts will have mechanisms built in whereby you are contractually entitled to terminate if the other party commits a material breach that is capable of remedy, you notify them of that breach and they fail to remedy within a certain period.
This means you have to give them a chance to put it right first and, importantly, you have to follow the required process to the letter.
The notice will probably need to be sent to a specific address and there may be a time limit in which you have to notify of the breach otherwise you might be out of time to rely on it.
2: Did the sales person promise you something different?
If the contract is high value you may have been approached/sold to by a sales person. You may have even signed up there and then.
Did you simply trust that the small print would contain all the things that were explained to you without properly reading it? Have you now discovered that it works slightly differently in practice?
If this is the case, you may be able to argue that you are a victim of misrepresentation and this could entitle you to rescind (terminate) the contract and claim damages.
Finally, it’s always a good idea to check your commercial insurance policies to see if you benefit from any legal expenses insurance cover. If you’re not sure and you use a broker, ask them.
Legal disputes can be very costly, and this sort of insurance cover could make all the difference. If you have it, not only might it cover your own legal costs, but it might also cover the other side’s legal costs if you lose.
If you need support with the termination of a business contract please contact our Dispute Resolution team to discuss your options and how we can help you.