Terminating a contract by mutual agreement

The parties may agree to end the contract on a specified date and arrange its consequences. The agreement must distinguish between termination of future obligations and performance of obligations that have already arisen.

Where breaches or disputed claims exist, the document may include a settlement of them, with defined concessions and limits. The agreement’s title is not enough; its substance determines which rights are extinguished.

A good agreement works as a completion checklist.

• Termination date and final day of service or supply.
• Issued invoices, disputed amounts, set-offs and the final payment deadline.
• Deliverables, ongoing projects and responsibility for the transition.
• Return of assets, documents, access credentials and equipment.
• Transfer or licensing of intellectual property rights.
• Personal data, copies, statutory archiving and confirmation of deletion.
• Warranties, support, complaints and obligations to end customers.
• Surviving clauses and limits of the waiver of claims.

The waiver must identify the period, contract and categories of claims covered. General wording can have unwanted effects on unknown rights, warranties or obligations that should remain in force.

The parties cannot extinguish third-party rights or obligations to authorities by agreement. Exceptions must also be retained for fraud, subsequently discovered breaches, tax obligations and other situations that cannot legitimately be closed by a bilateral declaration.

The relationship must undergo legal and financial reconciliation before drafting.

• The original contract, amendments, orders and schedules.
• Invoices, payments, deliverables and open complaints.
• The list of assets, accounts and access credentials to be returned.
• IP rights and licences relating to the project.
• Obligations to customers, suppliers or authorities.
• The transition plan and the people responsible for each step.