Termination agreement template

Ending a commercial relationship can be tough and there's a lot that needs to be ironed out before you do. This is where a termination agreement comes into play.

Discover how a termination agreement works and what it covers in this guide.

We've also added a free termination agreement template to use as a starting point. This could be used as a basis for a lease termination agreement or for the early termination of a lease agreement by a tenant.

What is a Termination Agreement?

A termination agreement, also known as a contract termination agreement or a mutual termination agreement, is a formal document that outlines the terms and conditions under which a contract between two parties will be terminated.

It is used to end a contractual relationship while minimizing potential legal disputes and maintaining a professional relationship between the parties.

What is the purpose of a Termination Agreement?

The primary purpose of a termination agreement is to provide a clear and mutually agreed-upon roadmap for ending a contractual relationship.

It outlines the rights, responsibilities and obligations of both parties during the termination process. This agreement is designed to minimize potential disagreements, ensure a smooth transition, and maintain a professional relationship between both parties.

Who is responsible for managing Termination Agreements?

The responsibility of managing termination agreements typically falls on the party initiating the contract termination.

However, it's beneficial for both parties to maintain copies of the agreement and to revisit it regularly to stay compliant with terms agreed.

What does a Termination Agreement template typically include?

The contents of a termination agreement can vary depending on the nature of the original contract and the reasons for termination. However, most termination agreements will have the following main components:

• Parties involved: The agreement should clearly state the names and contact information of both parties involved in the original contract.
  ‍
• Original contract: This section outlines the details of the original contract, including its purpose and effective date.
  ‍
• Reason for termination: This part explains why the contract is being terminated. It might be due to a breach of contract, mutual agreement, frustration, or other reasons.
  ‍
• Termination date: This outlines when the contract will be officially terminated.
  ‍
• Obligations and duties: This part covers any remaining obligations or duties that either party must fulfill before the termination date.
  ‍
• Release of liability: This clause releases both parties from any future claims or liabilities after the termination date.
  ‍
• Confidentiality clause: This clause ensures that both parties will not disclose any sensitive information obtained during the contract period.
  ‍
• Dispute resolution: This clause outlines the steps to be taken if a disagreement arises during the termination process.
  ‍
• Governing law: This section specifies the jurisdiction that will govern the termination agreement.

How are Termination Agreements created?

Creating a termination agreement typically involves several steps:

1. Identify the Need for Termination

‍The first step in creating a termination agreement is recognizing the need to end a contract. This could be due to a variety of reasons such as:

• a breach of contract;
• the completion of a project; or
• a mutual decision to end the agreement.

2. Review the original contract

‍It's crucial to review the original contract before drafting a termination agreement. This is because the original contract often contains clauses that outline the process and conditions for termination – so these need to reflect one another.

3. Draft the Termination Agreement

‍The next step is to draft the termination agreement itself. This document should include key details such as the parties involved, the date of termination, the reason for termination, any remaining obligations and a release of liability.

It's important to be as concise and specific as possible to avoid any potential misunderstandings or disputes.

4. Review and negotiate the agreement

‍Once the termination agreement is drafted, both parties should review it carefully. If there are any disagreements over the terms of the agreement, the parties will need to negotiate until they reach a mutual understanding.

5. Sign the agreement

Once both parties agree to the terms of the termination agreement, they will need to sign it. This can be done traditionally with pen and paper, or digitally using an eSignature tool.

6. Implement the agreement

‍After the termination agreement is signed, both parties will need to fulfil any remaining obligations outlined in the agreement. This could involve completing any outstanding work, making final payments, and returning any property or materials belonging to the company.

Common pain points when managing Termination Agreements

Despite their importance, managing termination agreements can present several challenges:

• Time-consuming process: Drafting a termination agreement from scratch can be a labor-intensive process, especially if the original contract was complex.
  ‍
• Legal complexity: Understanding and complying with legal requirements can be challenging.
  ‍
• Risk of errors: Manual drafting and editing of termination agreements can lead to errors, which can have legal implications.
  ‍
• Difficulties in negotiation: Negotiating the terms of a termination agreement can be a lengthy and challenging process.

How can automation help with managing Termination Agreements?

A contract management tool like Juro that automates up to 75% of routine admin and help you agree contracts 10x faster. Juro can help you to manage your termination agreements using the features below:

• Automated contract templates: Create automated termination agreement templates in seconds using automated, pre-defined templates in Juro. This not only saves time but also ensures consistency across all agreements.
  ‍
• Real-time negotiation: Juro allows you to negotiate termination agreement terms directly from your web browser. This makes the process of discussing the final terms of the relationship much easier and more professional.
  ‍
• Electronic signatures: Juro's platform includes native eSignature capabilities, making it easier for you to bring commercial relationships to a close.
  ‍
• Secure contract storage: After your termination agreements are signed, Juro provides a secure, data-rich contract repository to store them in. You can access valuable information from your agreements whenever you need, which is beneficial for ensuring you perform your remaining obligations.

Find out more about Juro

If managing contracts (like termination agreements) is painful for your business, it's time to consider Juro's all-in-one contract tool.

Juro makes it easy for businesses managing contracts to streamline the contract lifecycle and reduce friction.

To find out more, hit the button below for your personalized demo.