A mutual agreement for two businesses to terminate all or an identified part of an existing commercial services, software, supply or distribution agreement, while documenting financial close-out, property and data return, transition, surviving obligations and related protections.
What it covers
Mutual termination of all or part of an identified business-to-business services, software, supply or distribution agreement.
Termination arrangements covering the existing agreement, its amendments, orders and statements of work, with financial and operational close-out.
Termination where the parties may need a transition, return of assets or data, customer or subcontractor communications, and continuing licences or confidentiality obligations.
What it does not cover
Employment settlement agreements, severance agreements, or agreements settling employment claims.
A general settlement of unrelated disputes or claims not arising from completed performance under the Existing Agreement.
Termination of consumer contracts, real-estate interests, corporate acquisitions, insolvency procedures, or regulated financial agreements.
A novation or transfer of the Existing Agreement to a replacement supplier; use a dedicated novation or transition agreement where that is required.
Highlighted blanks are the details your parties fill in.
Parties
This agreement is dated the date on which it is signed by the last of the parties.
This agreement is made between [TO BE CONFIRMED — First Party legal name and details] (the "First Party") and [TO BE CONFIRMED — Second Party legal name and details] (the "Second Party").
Key Terms
"Existing Agreement" means the agreement identified as [TO BE CONFIRMED — Existing Agreement identifier], dated [TO BE CONFIRMED — Existing Agreement date], together with the amendments, orders and statements of work identified as [TO BE CONFIRMED — Affected amendments, orders and statements of work]
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"Termination Date" means [TO BE CONFIRMED — Termination Date].
"Termination Scope" means [TO BE CONFIRMED — Termination Scope].
"Closing Balance" means [TO BE CONFIRMED — Closing Balance], payable by [TO BE CONFIRMED — Closing Balance payer].
"Refund Amount" means [TO BE CONFIRMED — Refund Amount].
"Early Termination Charge" means [TO BE CONFIRMED — Early Termination Charge].
"Transition Period" means 90 days after the Termination Date. "Transition Services" means [TO BE CONFIRMED — Transition Services]. "Transition Charge" means [TO BE CONFIRMED — Transition Charge].
Termination
With effect from the Termination Date, the parties terminate the Termination Scope by mutual agreement. Any part of the Existing Agreement outside the Termination Scope continues in full force, subject to this agreement.
Termination does not affect any right, remedy, obligation or liability that accrued before the Termination Date, including rights relating to a breach occurring before that date. Neither party must perform obligations in the Termination Scope after the Termination Date except as this agreement or a surviving provision requires.
Financial Close-Out
Each party must provide any final valid invoice, credit note and reasonable supporting reconciliation needed to calculate the Closing Balance promptly after the Termination Date. [TO BE CONFIRMED — Closing Balance payer] must pay the Closing Balance within 30 days after receipt of a valid final invoice. A party may set off only an amount that is due and payable, undisputed or finally determined, against an amount otherwise payable under this agreement. Late payment interest is payable under the Late Payment of Commercial Debts (Interest) Act 1998 where that Act applies.
The recipient of prepaid fees or deposits must pay the Refund Amount to the other party within 30 days after the Termination Date. The Refund Amount is the parties' agreed adjustment for the unperformed part of the Termination Scope and is subject only to set-off permitted by the Financial Close-Out clause.
The party liable for the Early Termination Charge must pay it within 30 days after receipt of a valid invoice. The parties agree that it is a commercially reasonable agreed charge for the early termination and is not a penalty. Payment does not affect liability for amounts accrued before the Termination Date unless this agreement expressly states otherwise.
Return of Property
Within 10 business days after the Termination Date after the Termination Date, each party must return to the other, or dispose of as the other reasonably directs, the other's property, materials, equipment, keys, access cards, documents and tangible media in its possession or control. Each party must remove its personnel and equipment from the other's premises by the Termination Date unless the Transition Services require otherwise.
Data and Records
By 30 days after the Termination Date after the Termination Date, each party must [TO BE CONFIRMED — Data disposition] in relation to the other party's data held for the Termination Scope, except to the extent retention is required by law or reasonably necessary for legal claims, regulatory compliance or back-up systems. On request, it must give written confirmation of completion, identifying any retained data and the basis for retention.
Each party must comply with applicable data protection law, including the UK GDPR. Where one party processes personal data on the other's behalf, it must process it only to complete the agreed data disposition or meet a legal retention duty, ensure that its personnel are bound by confidentiality, apply appropriate technical and organisational security measures, notify the other without undue delay of any personal data breach, transfer the personal data outside the United Kingdom only on the other party's instructions and as the law permits, and provide reasonable assistance and information needed to demonstrate compliance. The parties must record in writing the subject matter, duration, nature and purpose of any continuing processing, the types of personal data and the categories of data subjects.
Confidentiality
"Confidential Information" means information of a confidential nature that one party or its group companies disclose to the other in connection with this agreement. Each party must keep the other's Confidential Information confidential, use it only to perform or receive the Services, and disclose it only to its personnel, professional advisers, insurers and permitted subcontractors who need to know it and are bound by equivalent duties of confidence, or where the law, a court or a regulator requires disclosure. These duties do not apply to information that the recipient can show is or becomes public other than through its breach, was lawfully known to it without restriction, is independently developed, or is lawfully received from a third party without restriction. These duties continue for 5 years after the Termination Date and, for trade secrets, for as long as they remain trade secrets. For this clause, "Services" means the services or other performance under the Termination Scope.
Intellectual Property
Nothing in this agreement transfers ownership of intellectual property rights. Each party retains the intellectual property rights it owned before the Termination Date or developed independently of the Termination Scope. Licences granted under the Existing Agreement end on the Termination Date except to the extent the Existing Agreement states that they survive or this clause provides otherwise. Any paid-up licence validly granted to a customer, end user or other authorised sublicensee before the Termination Date, and any related sublicence needed for that party to use the relevant deliverable or service as permitted before termination, continues on its existing terms for its stated duration. Each party must provide reasonable evidence of those continuing rights on request.
Transition and Handover
During the Transition Period, the relevant party must provide the Transition Services with reasonable skill and care and cooperate in good faith to achieve an orderly handover. It must provide the records, credentials, assistance and knowledge transfer reasonably necessary for that purpose. The recipient must pay the Transition Charge in accordance with the Existing Agreement's payment terms, or, if none apply, within 30 days after receipt of a valid invoice.
The parties record that [TO BE CONFIRMED — TUPE position]. Each party must promptly provide the information and cooperation reasonably required to assess and comply with the Transfer of Undertakings (Protection of Employment) Regulations 2006 and other applicable employment law. Nothing in this clause determines whether a relevant transfer occurs, which remains a matter of law.
Pre-Termination Claims
The warranties, indemnities, exclusions, limitations of liability and claim procedures in the Existing Agreement continue to apply to acts, omissions, services, deliverables and claims arising before the Termination Date, subject to any express change in this agreement. Neither party gives a new warranty about future performance of the terminated Termination Scope.
Each party must maintain insurance that it was required to maintain under the Existing Agreement, or equivalent run-off cover, for 6 years after the Termination Date after the Termination Date to the extent reasonably available in the insurance market and relevant to liabilities that may arise from pre-Termination Date acts or omissions. On reasonable request, it must provide evidence of that cover.
Commercial Freedom
This agreement does not create any new non-compete, non-solicit, exclusivity or other restriction on either party's business activities. Any such restriction that survives does so only if the Existing Agreement expressly provides that it survives termination and only to the extent enforceable.
General
This agreement is a commercial compromise and does not constitute an admission of liability, breach, fault or wrongdoing by either party.
Subject to performance of this agreement, each party releases the other from claims it knows about on the date of this agreement arising solely from completed performance of the Termination Scope before the Termination Date, but not from fraud, deliberate concealment, unpaid amounts, the obligations in this agreement, claims under continuing licences, confidentiality, data protection, intellectual property, or claims that cannot lawfully be released. The parties intend the mutual obligations in this agreement to be good and sufficient consideration for this release and intend this agreement to be legally binding.
Communications
The parties must cooperate in good faith to give accurate and timely notices concerning the termination to [TO BE CONFIRMED — Third-party notice recipients] within 10 business days after the date of this agreement. Neither party may make a material statement about the other in such a notice without the other's prior written approval, except where law, a court, a regulator or an existing contractual duty requires it.
Neither party may name the other as a client or supplier, or describe the Services, in any publicity without the other's prior written consent. For this clause, "Services" means the services or other performance under the Termination Scope.
General
The provisions of the Existing Agreement that expressly survive termination, and any provision that by its nature is intended to survive, continue in accordance with their terms, including provisions concerning payment, confidentiality, intellectual property, data protection, liability, indemnities, audit, records, governing law and dispute resolution. This agreement also survives according to its terms.
This agreement records the parties' entire agreement about the termination of the Termination Scope. Except as it expressly changes the Existing Agreement, the Existing Agreement remains unchanged. If there is a conflict between this agreement and the Existing Agreement, this agreement prevails in relation to the termination and its consequences.
A variation of this agreement is effective only if it is in writing, identifies itself as a variation of this agreement and is signed by authorised representatives of both parties. The parties intend the mutual obligations in this agreement to be good and sufficient consideration for its terms and intend it to be legally binding; where a variation requires execution as a deed, it must be executed as a deed.
Neither party may assign, transfer, charge, subcontract or deal in any right or obligation under this agreement without the other's prior written consent, except that either party may assign its rights to a group company or as part of a genuine sale of all or substantially all of the business or assets to which this agreement relates, on written notice to the other party. An assignee must agree in writing to be bound by the assigned obligations.
Notices
A notice under this agreement must be in writing and delivered by hand, by pre-paid recorded post or by email to the First Party at [TO BE CONFIRMED — First Party notice address and email] or to the Second Party at [TO BE CONFIRMED — Second Party notice address and email], or to any other address a party notifies for this purpose. A notice is received: if delivered by hand, on delivery; if posted, at 9.00 am on the second business day after posting; and if emailed, at the time it is sent or, if that is outside business hours at the recipient's location, at 9.00 am on the next business day. This clause does not apply to the service of legal proceedings.
General
This agreement and the Existing Agreement, as preserved or amended by this agreement, are the entire agreement between the parties about their subject matter. Each party acknowledges that it has not relied on a statement, promise or representation not set out in those documents, but nothing limits liability for fraud or fraudulent misrepresentation.
If a provision of this agreement is or becomes illegal, invalid or unenforceable, it is to be treated as modified to the minimum extent necessary to make it legal, valid and enforceable. If that is not possible, it is to be deleted. Any modification or deletion does not affect the validity and enforceability of the rest of this agreement.
This agreement may be signed in any number of counterparts, each of which is an original and all of which together form one instrument. A signature applied electronically is effective to the extent permitted by law, including the Electronic Communications Act 2000. This clause does not remove any requirement to execute this agreement as a deed where the parties choose or are required to do so.
A person who is not a party to this agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement.
Governing Law and Disputes
This agreement and any dispute or claim (including any non-contractual dispute or claim) arising out of or in connection with it or its subject matter are governed by the law governing the Existing Agreement. Any such dispute or claim is subject to the forum governing the Existing Agreement.