An end of contract occurs when one of the parties who has willingly entered into a contract or business deal with the other party ends the written agreement for various reasons. 

Terminology for Ending Contracts

When it comes to legal English, various terms are used that indicate that a contract is ending or being terminated. All terms have different meanings, but they all hint at a deal between two or more parties which is ending.

  • Termination: This term means that a contract between parties is being ended before the actual agreed-upon date stated in the contract. 
    • Sometimes, taking the Uniform Commercial Code (UCC) into account, termination can also refer to the legal ending of a contract without it being considered a breach. The term termination is generally used when a contract is being ended by either party, without breaching it. 
  • Cancellation: Cancellation alludes to an ending contract due to voiding its effectiveness, force, or validity. 
    • Usually, one of the parties is being released from its duties mentioned in the contract, even though they remain unperformed due to the fact that the other party has breached the contract.
    • According to the UCC, cancellation occurs when one party is ending the contract because the other party has breached it, but the difference from termination is that the party who decides to cancel the contract due to the other party's breach receives reimbursement from it for all outstanding obligations as originally stated in the contract. 
  • Rescission: If a contract is made undone, this is called rescission. 
    • All parties that were originally part of the contract can, under rescission, return to their original state. 
    • If one signee of the contract happens to make a comprehensible mistake or acts unlawfully, the contract is terminated, which is referred to as rescission. 
    • As an example, if you purchase a house but after having signed the contract, you find out that the landlord has clearly withheld important information about the condition of the pool, you can potentially rescind from the contract. 
    • Rescission is also used in cases of an underaged or older adult who is legally not allowed to or capable of signing the contract.

Along with these important terms, there is more terminology you should know about.

Impossibility of Performance

Performance: To take effect, people entering a contract need to take action of some sort, which is referred to as performance. 

  • If, for instance, a speaker for an event is being hired by a company, the signing of a contract is required. 
  • After the speaker that was hired has fulfilled the duties outlined in the contract, performance has taken place. 
  • However, if, for some reason, the speaker is unable to commit to his or her tasks as per contract, this is called the impossibility of performance. 
  • In this case, the contract can be terminated by the contract. 
  • Another example is a contract for a musical; if the actor is unable to perform, the contract can be ended. 

Breach of Contract

If one party knowingly does not stick to the agreements in the contract, it is breached and can be terminated by the other party. 

  • Should one of the parties that entered into the contract not fulfill its responsibilities, either partially or even fully, a breach occurs. 
  • Whenever a material contract breach happens, the affected party can request monetary payment for the damages, yet not for an immaterial breach. 
  • As an example, if a delivery arrives a day late, that is most likely not a material breach of contract. 
  • Nevertheless, a material breach happens when the purchased product arrives significantly later, which then financially affects your business operations.  

Prior Agreement 

An agreement prior to entering into a contract that states a specific reason for terminating a contract allows for ending the contract if this reason is taking effect. 

  • To end the contract without breaching it, specifics and conditions of this valid reason must be found in the prior agreement. 
  • Moreover, the detailed process of how to terminate the contract in case the agreed on reason becomes invalid should be described in the prior agreement. 

If you need help with end of contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.