Letter for Termination of an Agreement

What is a Letter of Termination of Agreement?

A Termination Letter for termination of an agreement is used by a party to let the other party know that they wish to terminate the agreement prior to the expiry of the term of the agreement. A party may wish to terminate an agreement prior to the expiry of its term for many reasons, including a breach by the other party or shutting down a specific activity/business. The parties may also wish to terminate an arrangement by mutual agreement if it is not working out for any reason.

It can also be used if the parties want to terminate the agreement in cases where there is no breach, but the parties mutually agree to end the contract. It also allows the party sending the letter to specify whether any amounts are due under the Agreement from any party to the other and to specify the time period within which the amounts should be paid.

The letter allows the parties to acknowledge that no further amounts need to be paid or obligations are undertaken after the termination and acceptance of the letter.

Is it mandatory to have a Letter of Termination of Agreement?

Yes, a written Letter of Termination of Agreement is required to terminate an agreement as it acts as a proof of record in case of future disputes.

What are the prerequisites of a Letter of Termination of Agreement?

The following things should be checked before issuing a Letter of Termination of the Agreement:

• Check the original document to find out if there is any clause related to its termination (e.g. what is the notice period, the way a termination notice should be sent etc.)
• Ensure that any required notices or cure period has been checked.
• Complete any pending payment or acts to be completed by the sender.

What can be the duration of a Letter of Termination of Agreement?

The notice period varies depending on the notice period mentioned in the original agreement and the nature of the transaction between the parties. Some agreements require a specific notice period, while others may allow immediate termination.

What has to be done once the Letter for termination of an agreement is ready?

Once this letter is completed with all the relevant information, the party sending the letter can sign and send an original signed copy to the other party by registered mail with acknowledgement due or email. Using registered mail or email allows a party to have a record that written notice of termination was sent in the event of any future dispute.

The other party should then sign and confirm the terms of the letter. While it may not be necessary in all cases for the receiving party to sign and confirm the terms of the letter (it would depend on the terms and conditions specified in the agreement between them) acceptance by the other party creates a legally binding document on both parties.

Which documents should be attached to the Letter of Termination of Agreement?

Any supporting document including the following can be attached along with the Letter of Termination of Agreement:

• The copy of the original agreement.
• Documentation of breaches or reasons for termination.
• Record previous communications regarding any breaches or termination.

What must a Letter of Termination of Agreement contain?

The Letter of Termination of Agreement must include:

• Parties information: Name and details of both the parties.
• Details of original agreement: Details of original agreement.
• Reason for termination: Clear and detailed explanation of the reason for termination.
• Effective date: When the termination will take effect (it can be either the date of the letter or some other date mentioned in the letter).
• Next steps: Any required actions post-termination, such as return of goods or payment of dues.

Which laws are applicable to a Letter for termination of an agreement?

Matters related to agreements and termination thereof are subject to the law of contract, and the provisions of the Indian Contract Act, 1872 would be applicable here. The Contract Act also contains provisions for loss or damage that may have been caused due to a breach of contract, which would be subject to the provisions in the agreement being terminated regarding the same.

The Specific Relief Act, 1963 may be relevant in cases of specific performance or injunctions.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.