Time To Terminate? How To Mitigate Risk

The coronavirus pandemic and global economic and political uncertainties mean that more businesses than ever are tied into unprofitable contracts or are required to purchase unwanted goods and services. Alternatively, they may find themselves facing refusals to perform contracts by their contractual counterparties. Absent a commercial resolution, companies may need to consider whether and how a contract can validly be terminated. Following on from our blog post on ir/remediable breaches in termination events, in this post we look at termination more generally and set out key considerations to avoid frequent pitfalls.

What is termination?

Termination releases both parties from further performance of their main contractual duties, although the innocent party will retain a claim for damages for breach of contract. Termination can be consensual. If not, a contracting party can (seek to) unilaterally terminate by accepting a counter-party's refusal to perform as a