Agreement to Terminate a Contract

This document takes the form of a deed and may be used by two parties who have previously entered into a contract together and wish to terminate this contract. This type of agreement is often formally called a 'deed of release'.

The document should be used where:

• the existing contract between the parties (the contract which is to be terminated under this deed) is governed by and enforceable in the jurisdiction of England and Wales. This information will usually be found within the existing contract; and
• the parties have agreed that the contract should come to an end; and
• there are no outstanding disputes in relation to the contract.

The document has been designed in a universal format, and may therefore be used to terminate a broad range of different contractual agreements. For example, this may include commercial contracts between businesses or some employment relationships. However, it is important for the parties to carefully check and consider whether they may be any further specific elements they may wish to include within a deed of release, particularly where the existing contract is complex in nature.

This document may therefore be used where the parties have mutually agreed that they wish to terminate the contract and wish to release all obligations and liabilities under it. This situation will apply where one party has performed their obligations under the agreement, and the other party has some outstanding obligations to complete under the contract and the parties have reached an agreement to discharge those obligations.

The parties can agree on a date that the agreement will end, which may be a date different from the date that the agreement is executed as a deed. The parties can also make provisions about any specific clauses which may need to continue following the contract's termination. For example, this may include any confidentiality obligations of the parties.

It should be noted that where the parties wish to change/alter the contract, as opposed to terminating it, a different document should be used. This is because the purpose of this document is to end all obligations under the contract and to release each party from its obligations under it.

Furthermore, where the parties are in dispute regarding a breach of the contract, this document will not be appropriate. Where such a dispute exists, the party alleging the breach may wish to send a formal notice to request a remedy. Where the other party fails to remedy the breach, the party may then elect to send a notice to formally terminate the contract on a unilateral basis.

How to use this document

The parties should carefully complete the questions with the relevant information. Once the document has been completed, the existing contract between the parties should be attached to the schedule at the end of the deed (space will be provided for this). The document should then be executed as a deed.

The document will not be reviewed by a lawyer to ensure that the legal content applies to the personal situation of the parties. In order to review the particulars of any final agreement, it will be necessary to instruct a lawyer. For assistance finalising, reviewing and executing a deed, advice should be sought from a lawyer who is regulated by an approved regulator in the legal services sector. It is possible to search for a lawyer using the Law Society – find a solicitor webpage.

There are different ways for a deed to be executed, which will depend upon the nature of the parties involved. This document allows the document to be executed in the manners set out below.

An individual party (including a sole trader)

Where a party is an individual person, including a sole trader, the document may be executed by the signature of that party in the presence of a witness who attests their signature.

A party that is a company

Where a party is a company, there are a number of ways in which the company may execute a document as a deed. This agreement allows for the following two methods to be used:

a) by the signature of two authorised signatories of the company (i.e two of its directors or one director and the company secretary); or

b) by the signature of one director of the company in the presence of one witness who attests the director's signature; or

A party that is a Limited Liability Partnership

Where a party is a Limited Liability Partnership (LLP), there are a number of ways in which the LLP may execute a document as a deed. This agreement allows for the following two methods to be used:

a) by the signature of two of the LLP's members; or

b) by the signature of one of the LLP's members in the presence of a witness who attests the signature.

A party that is a general partnership

The general rule is that a deed must be executed by all of the partners of a general partnership. Each partner/member of the partnership should therefore sign the document in the presence of a witness who attests their signature.

A party that is a limited partnership

Where the party is a limited partnership, this document allows for the deed to be executed by the general partner of the limited partnership. However, the applicable execution formalities may vary in accordance with the legal personality of the general partner. This should therefore be checked carefully where there is any uncertainty.

Where the deed can be executed by the general partner, the general partner should sign the document in the presence of a witness who attests their signature.

In all of the above circumstances, care should be taken to ensure that the witness is suitable and is able to legally act as a witness.

Once the parties have executed the document, they should both retain a final signed copy. The existing contract should then terminate upon the date which has been selected.

Relevant law

The general laws of contract will apply to the existing contract and the deed terminating it.

The main legal provisions which govern the execution of deeds in England and Wales are contained in:

• The Law of Property (Miscellaneous Provisions) Act 1989
• The Companies Act 2006

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

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.