Terminating a Contract

Terminating a Contract

Contracts are terminated for different reasons and under different circumstances. One reason is that all the parties to a contract have completely performed the duties they had to perform according to its terms. But suppose that before the parties completely perform their duties, they decide to call it off. For example, suppose you hire a contractor to build a second story on your house, and then both of you find out that the zoning prohibits second stories in your area. If you signed a contract with the contractor, the easiest way to indicate termination of it is to tear it up. If there were duplicate copies, be sure all copies are destroyed. Another way would be to sign an agreement of termination. A TERMINATION OF CONTRACT could be used to do this. This also could be a simple letter, a copy of which is signed by the recipient and returned.

The following sample letter is the basic language for an agreement between two parties to terminate a contract and release each other from all duties to be performed.

Sample Letter: Agreement to Terminate Dear Mr. Jones:

This letter is to confirm our agreement to terminate our contract for you to build a second story on my home due to the fact that second stories are not permitted by law in this area. This will further confirm that the $1,000 deposit that we paid you on that contract will be used toward our new contract to build a swimming pool in our back yard.

Sincerely, Jon Dough
Jones Construction
By: _______________________________________________________
Bob Jones, President