Contact: Prof. Dr. H. Ercument Erdem, Erdem & Erdem (Turkey)
Introduction
Execution of a termination agreement is one of the methods to terminate a contractual relationship between the parties. An advantage compared to a unilateral termination declaration by one of the parties is that it ensures that the rights and obligations of the parties arising from, or in connection with, the contract have been satisfied, and regulates the post-contract relationship between the parties, as well.
Parties are free to determine the principles of termination, the effective date of termination, and the contents of the termination agreement, to the extent possible under the applicable law. Content should be determined by taking into consideration the particulars of the main contract and the parties’ intention. Depending on the parties’ intention, the termination date may be set as the signing date of the termination agreement, or a specific date or occasion after the date of signing, as well as a retroactive date.
If both parties have fulfilled their obligations under the contract and are satisfied with the other party’s fulfillment, a settlement clause may be set forth in the termination agreement enabling the release of the parties from their duties and obligations under the contract, subject to the conditions of the applicable law. Applicable law and the dispute resolution venue may be different than that of the main contract.
This newsletter focuses on the characteristics and essential contents of termination agreements that terminate agency and distribution contracts. While setting forth the common principles applicable to both types, it also addresses the differences thereof when necessary.
