Contract Termination Rights

The rights you have if you need to extract your business from a contract, as well as your customer’s cancellation/termination rights, will largely be determined by the contract terms. Contracts should be reviewed to establish the contractual position and identify any terms requiring notice and whether they have been triggered, to assess if either party’s performance may be excused, or if a party can take measures to ensure performance; and to assess the risk and consequences arising from a potential breach or default.

The legal position differs depending on whether the customer is a business or a consumer. Businesses are generally free to contract on any terms they like regardless of whether the terms reflect a good bargain, subject to specific legal controls on unfair contract terms which exclude or limit liability (or those with a similar effect).

Cancellation fee provisions in B2B contracts are likely to be enforceable, particularly those not on standard terms. However, suppliers may prefer to take a balanced approach considering the commercial position rather than rely strictly on the contract terms. Even so, knowing the contractual position enables the business to make an informed commercial decision.

In B2C contracts consumers have greater statutory protection and the exact circumstances will need to be considered carefully to establish what action the business can take without falling foul of consumer protection laws.

To review the termination rights under your contracts, please contact Carys Thompson on or call Carys on 0114 252 1485.

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Carys Thompson Partner
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