How to Terminate a Contract With a Vendor

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Insufficient quantity or quality are reason enough to terminate your contract with a vendor.
Insufficient quantity or quality are reason enough to terminate your contract with a vendor. (Image: Michael Blann/Photodisc/Getty Images)

A business owner needs something to sell. Unless you produce your own goods, using raw materials you have mined yourself, you will have to rely on vendors. Vendors bring materials and goods to your business, giving you the stock you need to keep your company running and profitable. The specifics of these arrangements are set forth with contracts that are legal and binding. So, you need to have just cause to break your contract. Once you have established the reason for breaking your contract, you must notify the vendor.

Address the party who represented the vendor at the time you signed your contract. If that person is no longer handling your account you must address your letter to the new representative.

Refer to the termination clause in your original contract. Point out that you want to end your contractual agreement according to that clause.

Explain when the termination will commence. Tell the vendor when you will no longer require the goods or services offered by the vendor.

List your reasons for wanting to terminate the contract. Link each of your reasons to a section of your existing contract that the vendor has violated. If you do not have a valid, contractual reason you must state that fact in your termination letter and mention the fact that the contract allows you to act in such a manner.

Date the notification. One of the most essential aspects of any contract, or other legal document, is the date it was drafted. The date on your document establishes a time line that you can refer to in future correspondence or court proceeding.

Explain the follow-up procedure to the vendor. State when, where and how the vendor should contact you along with the acceptable reasons for such contact. Termination is the end of a business relationship, but there will still be instances where meetings must be made and payments must take place to wrap up your business with the vendor.

Tips & Warnings

  • Always consult an attorney when making, breaking or questioning a legally binding contract.

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