Contracts form the backbone of both daily transactions and intricate commercial relationships. Whether the informal sale of ugu in an open market or a multimillion-dollar deal between multinational corporations, the underlying features remain the same: offer, acceptance, negotiations, consideration, capacity, and legality. These features are central to the life of any contract.
Yet, what is often overlooked is how a contract ends. While parties typically focus on performance and enforcement, the capacity to exit the contract, lawfully and tactically, is just as crucial.
Terminating a contract is the conclusion of the agreement, whether it is an early termination, before one or more parties fulfil their contract obligations, or the natural end of a relationship between the parties1. Understanding how and when to terminate a contract is an essential tool for legal advisers, corporate entities, businesses, and contract managers. This article examines the foundational principles of contract termination, some grounds for ending contracts, key elements of properly drafted termination clauses, risks of improper termination, and guidance for handling the termination process suitably.
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