How do you terminate a contract?
Updated: Nov 20, 2021
It is common for business priorities to change and relationships to improve or sour over time. At some point you will want to end a distribution agreement, franchise or agency agreement.
Ending a contract is not always that straightforward...
The first step is to look at what the contract itself says - this is not always as simple as it may appear and legal help may be required to identify the correct steps to follow. However, this is not the end of the process. There are many terms which are implied by different countries in Europe.
France has particularly complex provisions. The notice period that applies when terminating a contract has to consider the length of the commercial relationship.
The aim is to ensure that the party whose contract has been terminated can prepare for termination by rearranging or reorganising its activities.
Therefore, even if a contract sets out the termination provisions including a notice period in the event of termination or non-renewal, the court could still decide that the notice period is not adequate.
As a rough rule of thumb, French Courts often award one month of notice per year of relationship but a lot depends on the individual circumstances so this is by no means an absolute rule.
There are lots of other issues you need to consider, particularly when ending an agency agreement where the payment of commission is very carefully calculated.
It is always money well spent to get local legal advice before terminating a contract - even one which may at first glance appear to be relatively small. This will save you money in the long run and reduces the likelihood of an expensive and distracting dispute.
To find out more contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - email@example.com