Contract Termination Letter: How to Write (+ Format and Sample)

A Contract Cancellation Letter is a formal document sent to an individual, company, or agency, stating your intent to end all business relations with them as previously indicated in your contract with them. Because most contracts are legally binding, you should consult an attorney when drafting this letter.

Terminating a business contract can be hard on many people, with most business people not knowing what to say. Unfortunately, this daunting task is necessary where you no longer wish to be in a contract either due to poor quality or unmet expectations.

In this article, we provide a guide and some example letters to help you cancel a contract.

When Should You Write a Contract Cancellation Letter?

Contracts are legally binding agreements that can carry grave consequences if handled inappropriately. That said, they are not permanent, and you don’t have to remain in a contract that is no longer benefiting you. If this is the case, you should consider drafting a cancellation letter.

Because contracts are legal documents, it is always advisable to consult an attorney before terminating one. The attorney will ensure you are not breaching the contract and that you follow the correct procedure, as stipulated in your agreement.

What to Include in a Contract Cancellation Letter

As mentioned, a contract cancellation latter can be used in a legal context, meaning it should always be written in a formal business format. In the introductory paragraph, state your reason for writing clearly to avoid any misinterpretation. Then, include the following details:

  • The company or agency’s name as indicated in the contract
  • Your name as indicated in the contract
  • The date and description of the contract
  • A statement indicating that the reader no longer has permission with any activities involving your account
  • A request for confirmation on the cancellation status
  • The legal steps you will take if the cancellation is not effected after the notice period.

Writing Tips for a Contract Cancellation Letter

A Contract Cancellation Letter is crucial as it informs the reader that you would like the service to end and they shouldn’t renew your contract. Consider the following tips when drafting it:

  • Use a professional and courteous tone.
  • Always type your letter on good quality paper and add a handwritten signature.
  • Keep your letter to less than 4 paragraphs.
  • Help the reader understand why you are canceling the contract.
  • Illustrate in the letter that you are following the cancellation guidelines stated in your contract.
  • Always thank the reader for the previous cooperation and wish them well. Don’t burn any bridges.

Contract Cancellation Letter (Format)

{Date}

{Recipient’s Name}

{Company Name}

{Company Address}

{City, State, Zip Code}

Re: Contract Cancellation

Dear {Mr./Mrs./Ms. Last Name},

I am writing to cancel the contract between me, {your name as provided in the contract} and {company/agency name}, which is dated {date contract was signed} for: {mention the products/services for which the contract is made}.

I am canceling the contract for the following reasons: {explain why you are canceling the contract}. The cancellation is effective immediately, and I would like you to {prescribe steps, e.g., refund my deposit}.

If you have any questions regarding this matter, please contact me at {contact information}.

Thank you for your prompt attention to this matter.

Sincerely,

{Your Name}

{Telephone Number}

Sample Business Contract Termination Letter

24 February 2031

Joy Griffin

LowKey Industries Ltd.

310 Highlander Road

Fort Worth, IN 20199

Re: Contract Cancellation

Dear Mrs. Griffin,

I am writing to cancel my current contract with LowKey Industries Ltd., which was signed on 20 November 2030, for the monthly delivery of office supplies. I have enjoyed our prior business relationship but will be awarding a new contract to a different company due to their competitive prices.

As per our contract, the expiry date is set for 26 February 2031. This is a request not to renew the contract for the next three months. I would also appreciate a refund of my deposit in the next 14 days.

If you have any questions regarding this cancelation, please contact me at [email protected]

Thank you for your prompt attention to this matter.

Sincerely,

Tilly Monroe

Contract Termination Letter (Word Template)

Contract Cancellation Letter (Word Template)

Bottom Line

Any written agreement between two entities can be considered a contract, which means you can use your Contract Cancellation Letter to discontinue anything from supplier services to a relationship with a client. When drafting your letter, keep your tone professional and polite and your message short and to the point. Always let the reader know why you are ending the contract and when it will take effect.

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