Notice of Termination
Drafting Notes
Drafting Note to Address Block
Providing proper notice of termination is critical, as a party’s ability to effectively end the agreement may be delayed
or even forfeited by a failure to give timely and proper notice. Counsel should review the terms of the agreement for
which the notice of termination is being provided and ensure the notice is sent to the proper individual or
department and in the manner as may be required by the agreement (if any). For example, the contract may require
notices be send to the recipient’s legal department, general counsel or a designated officer, and may also specify
the manner of delivery, such as by certified or registered mail. As termination may not be deemed effective until
such time that proper notice has been furnished in accordance with the terms of the parties’ agreement, it is
important to adhere to any notice requirements imposed by the agreement. With respect to sales transactions
governed by the Uniform Commercial Code (UCC), the UCC provides that notice or notification to another is given
by taking such steps as may be reasonably required to inform the other party in ordinary course, whether the other
party actually comes to know of the notice. A party is deemed to have received a notice when such notice comes to
its attention or the notice is duly delivered to it at the place of business through which the contract was made or at
any other place held out by such party as the place for receipt of such communications. See UCC § 1-202. While
oral notice may sometimes be sufficient notice, prudent practice mandates that written notice of termination be
provided.
Drafting Note to First Paragraph
Prior to providing notice terminating or cancelling the contract, counsel should thoroughly review the contract to
ensure that it can be terminated under the prevailing circumstances and to determine if there are any resulting
obligations or liabilities for the client that may be triggered pursuant to such termination. Certain agreements may
include terms that preclude cancellation or limit the right to terminate to specific grounds, while others may impose
financial or other obligations on a party that terminates for reasons other than cause or if the termination occurs
within a designated period after the agreement was entered. The termination letter should be drafted in a manner
that complies with the terms of the agreement and, in particular, any termination provisions. Before the notice of
termination is delivered counsel must make sure the client has a clear understanding as to any obligations or
negative ramifications that may be incurred as a result of the desired termination so the client can make a sound
and knowledgeable business decision regarding whether and when to terminate the agreement.
Drafting Note to Termination for Breach
This clause is premised upon the breach of the parties’ contract by the recipient of the notice, in an agreement that
does not require notice of the breach and a cure period. Some contracts allow a party to unilaterally terminate
immediately and without affording the breaching party an opportunity to cure its default. If termination is based upon
a breach for which notice has been provided but the default was not remedied within the cure period, the
Termination for Breach (after failure to cure) clause provided herein can be used. The notice of termination should
also include language demanding that the terminated party take any action that may be required under the subject
agreement upon termination. For example, the agreement may compel the return of any confidential information in
the terminated party’s possession or that it stop using any intellectual property rights that may have been
conditionally granted under the agreement. For more information regarding termination for breach, see Termination
and Cancellation Rights — Termination for Breach or Nonperformance.