Early Termination of Contract: Why should you sign it?

The buyer and the seller need to sign an ‘Early Termination of Contract’ when either the buyer or the seller decides to terminate ‘Offer to Purchase’ contract. It may happen when a buyer changes his/her mind to purchase a specific property. This may happen when the buyer experiences a financial setback that prevents him/her to perform financially. Regardless of the reason, the seller and the buyer need to sign a written agreement to terminate the previous contract.

Early Termination of Contract: Purpose it serves

An ‘Early Termination of Contract’ releases both the buyer and seller from any further obligation in reference to the original contract (such as, ‘Offer to Purchase Contract’). In this way, both the parties are free from the terms and conditions and no one can file a lawsuit against each other. They are also free to sign contracts with new parties. It is quite necessary to sign an ‘Early Termination of Contract’ even if the original contract is a verbal agreement. It ensures that both the parties involved are protected from any future lawsuits.

Required information

An ‘Early Termination of Contract’ form requires the following information.

• Name of the buyer
• Name of the seller
• The date on which the original contract was signed
• Terms and conditions of the original contract

Along with the above information, the buyer and the seller need to sign the contract in order to terminate the original agreement.

Early Termination of Contract: What it conveys

An ‘Early Termination of Contract’ conveys the following:

• Intention of the parties involved: The parties desire to terminate each other from any future obligations under the original contract. Both of them surrender all rights they have under the original contract.
• Deposit money: Both the parties agree to distribute the deposit as decided upon.
• Release from legal responsibility: By signing the contract, both the buyer and seller release and discharge each other along with their successors from any demands, claims and rights that may arise from the original contract.

Apart from above, ‘Early Termination of Contract’ becomes effective from the day when both the seller and buyer sign it.