Although the romantics amongst us wouln’t admit it, in some ways making a contract is just like getting married. Certainly, there is a general unwillingness to even admit the prospect of separation or divorce at the wedding ceremony, let alone discuss the exact terms and conditions of an eventual break-up with the vows of eternal togetherness. And so it is with contracts, too. Potential commercial partners, when courting in the intensive passion of the negotiations, spend little time to think what could happen if or when the end is nigh.

Contracts do end. Just as they have a beginning so they will have an end. We should pay equal attention to both types of events and certainly have detailed provisions in the contract. When a contract starts  (the date of effectiveness and validity) should be clearly stated in the agreement. Similarly, we should have contract clauses, as applicable, on if, how and when a contract can be brought to an end by:

a) the expiry of the contract term

b) termination for breach or other events

c) termination for convenience

d) rescission ab initio so that the parties are returned to their starting position

In some contract situations the parties may dare to briefly talk of termination, cancellation and rescission somewhere in the “Miscellaneous” section. But, the parties often do so without knowing exactly what they mean and realising that at law such words can have very different meanings and consequences. In the recent case of Hardy v Griffiths  [2014] EWHC 3947 (Ch) it was  held that the sellers of a property had in fact rescinded the contract ab initio (and not terminated it), with the unwanted result that they lost their rights to claim damages and to forfeiture of the deposit.

Breaking up is made even more complicated by international relationships: so-called cross-system contracts in which law and language are mixed. Thus, a German law contract drafted and agreed in the English language only, will have a hard job with an English law term such as rescission? Does it mean Anfechtung, or could it be Aufhebung, but then again, what about Rücktritt or even Kündigung? These are examples of the pitfalls of cross-system transactions. Translate with care!

But, most importantly, make sure that you do consider from the very beginning and  set out exactly in your contract doucumentation the circumstances that can result in a contract ending, how it will end and the respective rights and duties of the parties.

Separation can then also be a postive experience!