This toolkit outlines key legal and strategic considerations for terminating technology contracts, emphasising risk mitigation, proper notice procedures, and alternative solutions. It helps legal teams avoid costly missteps by guiding them through breach assessment, contract review, and the consequences of termination.

At a glance

• Consider whether termination is the best option: Termination can be high risk. There may be other commercial and legal options available to you to realise your aims. For instance, negotiation and variation of existing terms, service credits, step-in rights or contractual escalations.
• Carefully consider the contract: Consider whether termination rights exist, or whether a common law termination right has been excluded. Consider whether anything must take place before termination (such as ADR), whether there are any termination notice requirements, and whether there is a governing law or jurisdiction provision.
• Investigate the facts: A contractual termination right will need to be supported by a factual pattern. This will include consideration of whether there has merely been a material breach of contract, or a breach so serious that there has been a repudiatory breach. If the latter, this may provide a common law right of termination.
• Consequences of termination: Consider whether any payments are due on termination, whether limitations of liability still apply, whether TUPE rights are applicable and, whether exit assistance is required. Bear in mind that different types of damages may be recoverable depending on the method of termination.
• If you have decided to terminate, consider our top tips: It is vital when serving a notice of termination that you get this right. Keep our “top tips” below in mind.