Get More TLC: #20: Splitting up

The purpose of a contract is to give you both the right and the duty to provide the entire scope envisaged in your agreement ie all the agreed goods, works and/or services. But what if you want to split up before then?

A pale pink paper heart is torn and threaded on a striped string. The background is black. By Kelly Sikkema via Unsplash

Totally Legit Cancellation

As my book on Small Works says As all construction projects [and most other longer term projects] rely on trust and collaboration… once that trust has gone and it’s turned into a sort of turf warfare, then it makes more sense to go your separate ways than continue. [Chapter 19]

If you are working under English law with consumers ie people not acting in the course of a trade or business, then the Consumer Rights Act 2015 requires you to allow them to cancel the contract for 14 days after signing – this is a cooling-off period. [See Chapter 18, Small Works]

After that, normal freedom to contract applies ie you get to set out the terms on which you can split up. Termination or cancellation clauses are often a mix of:

  • A right for the client only to end the contract on notice without giving any specific reason – the equivalent of a no-fault divorce. In reality there is no reason why you shouldn’t allow your client to cancel, provided they compensate you for loss of profit on work you didn’t do, or costs incurred and not yet invoiced.
  • A right for both parties to end the contract immediately for insolvency ie an inability to pay their debts.
  • A right for both parties to end the contract on notice for certain trigger events – this might include failure to give access, failure to pay, incompetence and so on. Unsurprisingly pandemics and wars are now increasingly featuring on these lists.

Termination should never be wholly one-sided with no right for the provider/supplier to end the contract.

If there is nothing in your contract on termination, then you can only end the contract for fundamental breach ie acts which indicate a party no longer intends to comply with its duties under the contract. This is a tricky area and although abandoning a project or refusing any further payment could be enough, you may not be able to rely on that. This is why a sensible balanced termination clause is one of my must-have clauses even in a 500-word contract!