Skip to content Skip to footer
Enquiries Call 0345 209 1000
Two professionals reviewing a contract

Navigating contract termination

How our expertise can save your business costs and headaches

Navigating the complexities of contract termination can be an involved process, especially when faced with uncertainties about the consequences and potential liabilities involved. As experienced commercial dispute solicitors, we understand the intricacies of the relevant law and can offer our expertise to help you make a more informed decision while safeguarding your business interests.

Understanding the consequences

Terminating a contract can have significant implications for your business, ranging from financial penalties to damaging relationships with counterparties. If you are unsure about the potential consequences of terminating a particular contract, it is crucial to seek legal advice before taking any action. We can review your contract, assess the termination clauses, and provide a comprehensive analysis of the potential outcomes including the legal merits and weaknesses, and the commercial options available to you.

Assessing the enforceability of penalties

We have recently advised a long-standing client in respect of a significant payment demanded upon our client’s termination of a services contract. In particular, we considered whether there was scope to argue that the demanded payment amounted to an unenforceable penalty. We concluded that the penalty was indeed unenforceable as there was no justification for the penalty clause (it did not merely seek to protect the legitimate interests of the service provider by deterring termination) and the sum in question was wildly disproportionate in the circumstances.

Generally, penalties that are deemed excessive or punitive may not be enforceable. However, the question as to what amounts to a penalty is not always straightforward to answer. Whether you are seeking to enforce a penalty (and therefore potentially exposing your business to additional costs and legal challenges) or are in receipt of a demand for payment upon termination (which may not be enforceable), it is important to seek legal advice in order to minimise the risk of litigation. Our team can provide clear guidance on the likelihood of enforcement and explore alternative strategies to mitigate any risks.

How can we help?

Our commercial litigation team are experienced in dealing with issues concerning and arising out of contract termination. Whether negotiating with counterparties to reach a mutually beneficial resolution or representing your interests in court proceedings, our objective is to assist you in protecting your business needs and minimising costs and risks associated with contract termination.

Your key contacts

More on this topic

Commercial litigation and disputes

Fraud and asset recovery

Where a business or individual has suffered a loss because of a fraud, our specialist fraud and asset tracing team can assist by securing the assets and pursuing a claim in the civil courts.
Read more on Fraud and asset recovery
Commercial litigation and disputes

How to safeguard business assets, including employees, clients and contracts

As a business leader, your clients, relationships, and confidential business secrets are your crown jewels. You must handle them with the utmost care or risk your business’s success. If you don’t you might end up gifting your hard work and talent to your nearest competitor.
Read more on How to safeguard business assets, including employees, clients and contracts
Commercial litigation and disputes

Can you get judgment early in an unfair prejudice petition?

Are you a shareholder feeling sidelined by your company’s management? The Companies Act 2006 offers a lifeline through an unfair prejudice petition which enables shareholders to seek court intervention when their interests are unfairly harmed.
Read more on Can you get judgment early in an unfair prejudice petition?

Looking for legal advice?