The termination of a business contract refers to the legal act of one party notifying the other party to terminate the legal relationship of the original contract due to the occurrence of subjective circumstances that make the performance of the contract unnecessary or impossible before the contract is not performed or fully performed. The rescission of a contract is a unilateral legal act. As long as the statutory or agreed reasons for rescission of the contract occur, one of the parties has the right to notify the other party to terminate the contract.
There are roughly the following types of contract termination: one is the termination of the agreement, the second is the inability to achieve the purpose of the contract due to force majeure, the third is the delay in performance, the fourth is incomplete performance, and the fifth is refusal to perform.
These Terms generally include the following:
Cancellation conditions:Determine the circumstances under which the contract can be terminated, such as breach of contract, force majeure event, mutual agreement, etc.
Notification Requirements:Stipulate the time and manner at which prior written notice is required for the termination of a contract.
Default Situation:If the contract is terminated due to a breach of contract, the clause may specify the liability of the breaching party and the possible compensation.
Compensation:Stipulate the compensation or refund arrangements that may be involved in the event of termination.
Termination Procedure:It describes the procedural steps for terminating the contract, the obligations of both parties after termination, and how to deal with the part of the contract that has been executed.
Irrevocability:Stipulates whether the decision to terminate the contract is voidable or whether there is a possibility of reinstatement after rescission.
If a cancellation clause can include all of the above, an example is as follows:
Cancellation conditions:either party may terminate this agreement in the event of a material breach by the other party or if circumstances arise that prevent either party from fulfilling its obligations under this agreement for a continuous period of more than 30 days.
Either party may terminate this Agreement in the event of a material breach by either party or in the event of a failure to perform its obligations under this Agreement for a period of more than 30 consecutive days.
Notification Requirements:the terminating party shall provide written notice of termination to the other party at least 30 days prior to the intended termination date.
The terminating party shall give the other party notice of termination in writing at least 30 days prior to the intended date of termination.
Default Situation:in the event of termination due to breach, the breaching party shall be liable for any damages incurred by the non-breaching party as a result of the breach.
In the event of termination due to breach, the breaching party shall be liable for any losses incurred as a result of the breach.
Compensation:upon termination, the non-breaching party shall be entitled to a refund of any prepaid fees for services not yet rendered.
Upon termination, the non-defaulting party shall be entitled to a refund of the prepaid fees for the non-provision of services.
Termination Procedure:upon termination, both parties shall cease any further obligations under this agreement, except those that by their nature survive termination, such as confidentiality obligations.
Upon termination, the parties shall cease to perform any further obligations under this Agreement, except for those which by their nature require to survive termination, such as confidentiality obligations.
Irrevocability:termination of this agreement shall be considered final and not subject to revocation or reinstatement.
Termination of this Agreement will be deemed final and irrevocable or reinstated.
Reference. Stylistics and Translation of International Business Contracts" by Liu Qingqiu.
*: Translation.