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Rights to Terminate a Commercial Contract Successful Use and Liability for Misuse

It is often the case that one party to a commercial contract (“the promisee”) wishes to bring that contract to an end, whether as a result of default on the part of the other party (“the promisor”) or otherwise. As litigators are well aware, such decisions must be taken with utmost care because - in wrongly purporting to terminate a contract - a promisee can, in principle, leave itself exposed to a claim for substantial loss of bargain damages from the promisor. In such circumstances, issues can arise out of the particular terms in which the promisee purports to terminate. Moreover, particularly complex issues can arise out of attempts to rely upon more than one termination right at the same time. It is hoped that the thoughts offered below will assist in understanding the potential consequences of framing a termination notice in particular terms, and in understanding the circumstances in which a promisee may successfully use alternative termination rights together.

David Thomas QC and Matthew Finn