How to Write a Contract Termination Letter


Contracts are a daily fact of life. Individuals sign contracts for communications and utility services, gym memberships, purchase programs and in-home services such as lawn care and house cleaning. Businesses sign contracts with suppliers, service vendors, contract employees and clients. Most business contracts and many personal contracts require that the terminating party provide written notice of termination to the other party. Often, this notice must be delivered within a certain time frame, be delivered to a stated address and must supply specific information in order to be binding and valid.

1. Format your letter as a standard business letter. Your name and full mailing address should appear first, followed by the date on which you are writing the letter. Then write the recipient's address exactly as specified in the contract. If you are printing on letterhead that includes a pre-printed address, you may omit your address. Include a salutation such as "Dear Mary Smith" or "Dear Smithco."

2. State that you are canceling your contract and specify the contracted services. If you have a membership or account number, include that information. State the date on which the contract termination is effective. Explain that you are canceling as per the terms of your agreement and cite the contract when possible. For example, you may say "I am canceling the contract for my gym membership, member number 4444. As per the contract, I am providing 30 days advance notice, so the contract will terminate on (insert date)."

3. Give a reason for terminating the contract. This step is optional unless the contract specifies that a reason must be provided. However, including it may save questions later. Remain calm and professional. While you may be unhappy with the service you are canceling, it is better to say "I am canceling due to unsatisfactory service" rather than "I'm canceling because you're all a bunch of liars."

4. Address fees and outstanding balances. If you are canceling prior to the contract's expiration date and you expect to incur termination fees, state that you are including a check for the amount due or ask to be billed. Be sure to specify the amount due and, if writing a check, include the check number. If you are invoking a non-performance or other clause in order to terminate early without fees, clearly state your reasons for invoking and list any and all backup documentation you are providing with the letter.

5. Thank the company for addressing your termination promptly. If the relationship did not end badly, thank the company for its period of service; you never know when you might want to do business again.

6. Sign the letter. Include your full name and, if signing on behalf of a company, the name of the company and your position there.

7. Indicate any enclosures or attachments. Simply write the word "enclosures" one line below your signature block, then list the names of the documents enclosed.

8. Note distribution copies. If anyone other than the recipient will receive the letter, indicate this by noting "cc: (insert person's first initial and last name)." If you are writing the contract termination letter on behalf of a business, list "file" as a copy recipient (and to file a copy of the letter).

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