Change and termination of contractual agreements

Change and termination of contractual agreements


Although terms and conditions are an extremely valuable tool which can be used to set the foundations for any commercial arrangement, in the case of long-standing business relationships such as those involving ongoing supply of goods or services contracts for manufacture or resale, there will come a time when the terms of an agreement will need to be changed or updated or the agreement itself may need to be concluded. It’s important to know the best ways to vary terms, amend a contract or bring it to an end, so that your business interests are protected.

Changing a contract

If you wish to vary the terms and conditions of a long-standing business agreement, such as that for the supply of goods or services, it’s important to ensure that any changes are agreed to by both parties and that this agreement is recorded in writing so that it can be referred to if any disputes arise. Although changes can legally be agreed to orally, in practice it’s very tricky to enforce agreements which are not recorded in writing.

In order for a contractual change to be effective, it should offer a mutual benefit (or detriment). If only one party gains or suffers due to an amendment of Ts and Cs, it will be necessary to use a Deed of Variation of Agreement to give legal effect to the changes. In cases where certain details of a contract need to be changed (as opposed to substantive terms) - such as updating contact details - sending a relevant letter can be sufficient.

If your business is being sold, you can use a novation letter for sales or purchases to ensure that your contracts with customers and/or suppliers are successfully transferred to the purchaser.

Terminating a contract

It may become necessary to bring an ongoing contractual agreement for the supply of goods or services to an end, either as a result of financial considerations or because you are forging a new business relationship or bringing things in-house. Whatever the reason for terminating a contract, it’s important to comply with any notice period to which you have agreed.

You may decide to bring the contract to an end unilaterally using a termination letter but in certain situations it may be better to use a mutual cancellation or release document, particularly if a handover of duties is necessary.

A variety of documents related to change and termination of contractual agreements can be downloaded from our Business Documents Folder. Click on any relevant templates in the list, below, for further information.
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