Termination Agreement Practical Law

With respect to curable offences, where a contract contains an explicit additional period (z.B 21 days) and the nature and conditions of the undertakings are also clear, a simple statement by the party who contravenes the violation will not be sufficient to "cure" the violation if the offence is not corrected within the prescribed time frame. On the contrary, and unsurprisingly) to be exempt from a violation and the consequences of termination, the offender would have to complete the contract before the prescribed period (21 days) had expired. This happened at Bains v Arunvill Capital Ltd. The Court of Appeal accepted the regional court and applied a two-step test to determine whether Arunvill was entitled to terminate the contract summarily: it is necessary (1) to identify the "substantial violation" indicated and (2) to determine whether that offence has been cured. A simple explanation of an intention to heal is not enough to repair the offence. As a result, Arunvill had the right to terminate the contract summarily. Indeed, as Moylan LJ acknowledged, this decision does not raise fundamental questions about the interpretation of substantial infringement clauses. However, it is useful to remind counterparties that in cases where the nature of the obligations (service delivery) and contractual conditions (within 21 days) are so clear, the effective act of enforcing the undertakings will be necessary to remedy the infringement and a mere expression of intent to do so will not suffice. In a recent decision by the Privy Council, Attorney General of the Virgin Islands/Global Water Associates Ltd, a violation of the first water construction agreement (DBA) for the construction of a hydraulic facility was so serious that the second interconnected management, operating and maintenance agreement (MOMA) was ineffective for the installation.

The refusal of the Government of the Government of the British Virgin Islands (BVI) to provide a site for the installation in accordance with contractual conditions led Global to effectively terminate the DBA and claim damages for the profits it allegedly made under MOMA, but for the government`s violation of the DBA. The government argued that such losses were too far apart to recover. Parties who are dismissed must deal with important practical issues, such as to prevent claims in the event of unlawful termination from arising or being meaningfully invoked. This includes: in some cases, a contract does not provide for termination, so the common law principles of refusal come into play. A violation of the refusal is serious and goes into the heart of the contract, so that the innocent can, once committed, be allowed to leave without being held liable for damages to the other party. The waiver of the contract (a clear refusal to comply with obligations) is an example of non-compliance with the agreement; Violation of a condition or a sufficiently serious violation of an interim period (i.e. a condition or guarantee). With respect to the recovery of damages, a common law party may seek compensation to reflect the missed possibility of performance of the contract following an early termination (see Lombard North Central plc/Butterworth), but must ensure that the damage is not too far away. Similarly, "lost gains" are able to be recovered while it depends on the faktin. In order to determine whether such losses are repayable, the courts will consider, among other things, the specific knowledge and expectations of the parties at the time of writing the contract.

The explicit text of a non-violation clause determines the scope and effect of termination rights. These explicit rights are related to general rights, unless they are expressly excluded and may include rights with: the contract in question provides that any substantial infringement can be corrected within 21 days following a written notification from the innocent party that requires them to be settled.

We cannot display this gallery