Termination of Contracts

All commercial contracts are able to be terminated, in certain circumstances, if the correct legal procedure is followed.

Written commercial contracts usually contain express terms relating to breaches of contract and require that notices of breach must be served before any further steps are taken.

In these circumstances, parties to a contract should be very careful in preparing proper notices of breach so that they comply with the terms of the contract.  If notices are incorrectly prepared or incorrectly served they may be invalid and proceeding on the basis of an invalid notice may itself have very serious consequences.

Experienced commercial contract lawyers should be engaged to advise on the correct procedure and the preparation and service of notices of default. 

Common law applies to all commercial contracts whether they are written or unwritten and allows contracts to be terminated, in some circumstances, even without notices of breach being first served.  The common law circumstances where a commercial contract can be terminated without giving prior notice of breach are limited to only certain types of fundamental or very serious breaches.  The contract may also be terminated when there is repudiation of a contract, where one party to a contract, by their conduct, conducts themselves in a way that shows they are not going to treat themselves as bound by the terms of the contract.

If an invalid notice of breach or an invalid termination occurs because of an incorrect assertion of a fundamental breach having occurred or an act of repudiation having taken place when that is not in fact correct, then these mistakes can have very serious contractual consequences including having that party liable to the other for payment of damages.

Experienced commercial contract lawyers should be used to advise on the law relating to the termination of contracts, to prepare the proper notices and to advise on the remedies including damages that are available for breaches of contract and terminations of contracts.

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