How to write a notice of termination?

  It is hard to find anyone who has never had anything to do with a contract at some point in their life. It is now commonplace for us to enter into contracts such as: employment contracts, loan agreements, contracts for the purchase of a house or flat or a car, tenancy agreements for a flat or house, contracts for the provision of telecommunications services, or contracts for construction works, specific-task contracts or service contracts. It would therefore seem that the concept of a contract has become firmly established in our consciousness. Nevertheless, one might wonder whether an equal awareness of the consequences arising from such a contract has taken root. Unfortunately, very few people still know how to influence the terms of a contract (even before it is concluded) in a way that safeguards their own interests as effectively as possible. Equally problematic for some may be the question of how to terminate a contract when, for example, due to a change in circumstances, it is no longer advantageous or even necessary for us. Thus, whilst the formalities involved in concluding a contract seem to have been ‘brought under control’ to some extent, the matter of exercising the right to terminate a contract very often presents various difficulties. Generally speaking, to avoid any potential unpleasant surprises associated with entering into a particular contract and the subsequent application of its provisions, appropriate steps should be taken even before signing it. Depending on the level of our involvement (particularly financial) associated with the contract, it is worth consulting its content with a professional specialising in the conclusion and termination of contracts – for example, a legal adviser. A signature on a contract is not merely a graphic mark, but usually entails an obligation. This means that by signing a contract, we assume both the specific rights and obligations arising from it. Consequently, on the basis of the contract, the other party may expect or require (and not infrequently also demand) a specific course of conduct from us – and this under the threat of taking legal action to enforce that conduct (or to claim damages), as well as holding us accountable for any failure to comply. In essence, therefore, it is worth (and indeed necessary) to read the contracts we sign, and to read them carefully (which is still not obvious to everyone), regardless of how trivial the matters they concern may be. As we know, sometimes standard contract templates are, in a sense, imposed on us – such as most contracts for the supply of utilities (i.e. contracts for the supply of electricity, water, etc.). These are not always rigid frameworks that cannot be modified, and if they are, for example, commercial premises lease agreement contains provisions with which we do not agree – you must under no circumstances sign such a contract. Contracts of this kind usually contain errors that may even render them unlawful in their entirety, or at least some of their provisions. This is because, not infrequently, standard templates are drawn up by certain companies or institutions and remain in use for extended periods without being regularly updated to reflect the dynamic changes introduced by the legislator in the applicable legislation. Admittedly, where a contract is inconsistent with the provisions of an Act, as a general rule, the provisions of the Act usually take precedence (although this is not an unambiguous matter, as there are relatively mandatory provisions – that is, those which may be modified in contracts – and absolutely mandatory, non-modifiable provisions, as well as those in between – semi-mandatory), it is all the more important, in order to avoid unnecessary disputes later on, to ‘flag up’ such questionable provisions at this early stage of the transaction. We should also bear in mind that, from a legal point of view, there are no (or at least there should be no) random words in a contract. And unless we are specialists in a given field, we may not be aware of the consequences that a particular provision might entail. It is therefore worth reading contracts before signing them, not least so that we can ask questions and clarify any doubts regarding the meaning of specific phrases that are unclear (sometimes due to the use of specialist language). Of course, negotiations regarding certain contracts can be difficult. This is particularly true if we are very keen to enter into the contract, or even (for whatever reason) have to do so, whilst the other party is unwilling to take our comments on board. Nevertheless, as a party to the contract – particularly one in the (weaker) position of a consumer – we have the right to receive the expected clarifications regarding the scope and subject matter of the contract, as well as the obligations that will arise for us from it. As a general rule, the so-called principle of freedom of contract applies to the drafting of contracts. Under this principle, the parties to a contract may structure the legal relationship as they see fit, provided that its content or purpose does not conflict with:

• properties (nature) of the relationship,
• neither act
• principles of social coexistence.

Considering the above, it might appear that there are no obstacles to shaping the content of a contract in a completely arbitrary manner. However, it must be remembered that by entering into a contract, the parties signing it enter into a relationship, and the act of concluding the contract produces not only the effects expressed within it, but also those arising from the law, social principles, and established customs. Regardless of how a given matter is expressed in the concluded contract, its actual consequences can be much broader.

For example: Jan Kowalski, who lives in a detached house in the countryside, is renting out his vacant and unused flat to Piotr Nowicki (the son of his neighbour) for the duration of his studies. The flat is quite large, so Piotr Nowicki, with Jan Kowalski's consent, sublets the flat to two of his colleagues. Kowalski signed an agreement with Nowicki, but it is only a simple, short contract that does not take into account many aspects specific to this type of legal transaction. At the same time, the rent payable by Piotr Nowicki was included in it, which was not modified (e.g., in the form of an addendum) after the aforementioned two co-tenants joined the flat. Jan did not sign any agreement with Piotr's colleagues; he only agreed orally with them to pay specific amounts, which were transferred in full through Piotr. The amount Piotr actually received is therefore higher than the rent specified in the written agreement concluded with Piotr Nowicki. After several months of harmonious cohabitation and meeting the agreed obligations, during a weekend when Piotr Nowicki was staying at his family home in the countryside, the colleagues-co-tenants organised a student party. The scale of the party surprised even themselves, and they lost control of the guests, resulting in serious damage to the flat. Upon Piotr Nowicki's return, the colleagues, fearing they would be burdened with the high costs of restoring the premises to their previous condition, announced that they did not intend to bear any responsibility. Arguing their position, they pointed out that they had not signed an agreement which would indicate who was responsible for the losses. Additionally, they arrogantly claimed that the lack of an agreement meant, in their opinion, that it was impossible to prove their actual use of the premises. In relation to the aforementioned legal consequences arising from the agreement, at least several significant broader legal aspects can be identified in the above history (even though they are not mentioned in the written agreement). One of them (independent of the fact of the flat's destruction itself) concerns the statutory obligation to declare income earned by the landlord (Jan Kowalski) from renting out the flat to the tax office. And indeed, the income should relate not only to the rent amount specified in the contract signed with Piotr Nowicki, but also to the sums received by Jan Kowalski (via Nowicki) from co-tenants. This obligation was of course not specified in the contract (it didn't have to be), but the very fact of receiving such income entails the necessity of declaring it to the tax authorities. This follows directly from tax laws. The second aspect (referring directly to claims for damages for destruction of rented property) to: the failure to sign an agreement with Piotr Nowicki's flatmates, as well as - the failure to include appropriate provisions in the agreement (both in the written agreement concluded by Jan Kowalski with Piotr Nowicki, and in the oral agreements "concluded" by Piotr Nowicki with his colleagues) regarding the right to claims for eventual damages, in no way prejudices the possibility of holding the perpetrators of these damages accountable. In addition to the applicable regulations, the aforementioned principles of social coexistence, as well as established customs, can be of obvious assistance here. After all, the aforementioned colleagues used the aforesaid residential premises for several months - paying the agreed rent and actually living in them (which could be proven, for example, through witness testimonies, e.g. neighbours) - which should be treated as an expression of will (not written down, but still) to use the premises for payment - and on the other hand, an expression of will to make the premises available for payment - in summary: an agreement was concluded premises lease agreementHowever, regarding serious damage caused within the flat, it should be noted that even if specific clauses regarding liability for potential damage are not included in the agreement, using the premises in accordance with established customs and principles of social coexistence falls within certain defined limits. And within these limits, vandalism that can occur as a result of alcoholic student parties certainly does not fit. Of course, the above example falls into the more complicated category and may therefore require direct intervention from an experienced professional (e.g., a legal advisor). Nevertheless, the simplest moral lesson that emerges from this example is the fact that it is worth concluding contracts in writing and remember to at least consider taking into account various types of "unusual" situations that (even purely hypothetically) may occur regardless of the relations between the parties. The author of this article once rented an apartment (also to a legal family!) and the next day after a house-warming party, a dozen or so shrubs were found in the apartment... 🙂 This refers to both provisions concerning potential liability for the improper performance of obligations arising from the contract, as well as the possibility of terminating the contract before the date for which it was concluded (e.g. in the event of a justified loss of trust and fear of further losses). The inclusion of the right to terminate the contract is an important aspect in the category of contract conclusion (regardless of their type). Of course, in very many cases, the law itself also governs the termination of contracts. In such instances, irrespective of whether relevant clauses were included in the contract’s wording or not, this right is afforded to the parties (or party) by statute. However, a failure to include appropriate provisions in the contract may usually result in various limitations and problems. As a rule, termination provisions should be included in absolutely every contract concluded. This knowledge – as well as the ability to formulate such a basic provision – should be a component of teaching from primary school onwards. Regardless of who we are making an agreement with and how much we trust that person, or even have an obligation to trust them. If only because by not clearly defining these principles in an agreement, we expose ourselves to unnecessary conflict with our closest family, friends, or acquaintances. Paradoxically, it is precisely a written agreement that protects us from such conflict. In relation to the above, it must be remembered that provisions regarding termination unfortunately cannot always be shaped in a completely arbitrary and discretionary manner. Depending on the type of agreement being concluded, the deadlines and principles for applying the institution of termination specified in the agreement should correspond to the principles arising from the applicable legal provisions in this regard. Of course, applying different ones is possible – but it requires the consent of both parties, both at the stage of concluding the agreement and its termination. For example: provision of art. 27 of the Balloon Law Act stipulates that the contract regarding the storage of balloons should have a minimum notice period of one week. Stefan concluded a contract with Panfucy for the storage of the balloons, which included a 3-day notice period. Stefan terminated the contract with Panfucy three days before the date he wanted to collect the balloons, after three days he came to Panfucy, who gave him the balloons, shook hands and wished him a nice party. In the example described, nothing bad happened - the contract was concluded consensually (i.e. in accordance) and performed in the same way. This is how 95% contracts concluded in society look like. The problem arises only when misunderstandings occur between the parties - and these lead not only to courts, but also to ordinary, unnecessary conflicts between people.  When entering into agreements, it is better to take into account various justified restrictions that exist in this regard, resulting from different circumstances, e.g. from the nature of a given legal transaction. If in doubt, it is best to consult a specialist in concluding and terminating agreements – e.g. a legal advisor. The institution of contract termination is an extremely important tool for the parties to the contract, but it should be used as a last resort. Beforehand, however, it is worth summoning the other party in a form that can be proven later (in writing, via text messages, or emails) to properly perform the contract before terminating it, or to try to negotiate better – more favourable terms for us. At the same time, to "facilitate" the possibility of using this tool, it is worth including in the contract the circumstances under which it can be applied. In its simplest form, the contract provisions regarding termination may read: "The parties have the right to terminate the contract with one month's notice." Termination of the lease agreement for a limited period "requires the documentary form to be observed." Such a provision means that if one of the parties wishes to terminate the concluded agreement, they will have the right to do so by submitting a notice of termination (in writing) to the other party, which will take effect exactly one month later. As a rule, only with employment contracts is the first day of the calendar month following the month in which the notice was given the date from which the notice period is calculated. Of course, it is also possible to stipulate in the agreement that the notice period will expire at the end of the next calendar month. For example: Jan Nowak has rescinded the agreement concluded with the bread supplier, which stipulated a one-month notice period. The notice was delivered to the aforementioned operator on 15 November 2020. Consequently, the agreement will be terminated on 15 December 2020. For more complex agreements, especially those requiring significant financial resources or involving high-value items, it is advisable to expand the provisions concerning termination accordingly (with the most effective protection of one's own interests). For instance, in the case of renting out an apartment furnished with valuable equipment and furniture, the agreement should include provisions regarding liability for their destruction (excluding, of course, ‘damage’ resulting from their proper use) – while also taking into account the right to terminate the agreement immediately in the event of gross violations in this regard. Regarding the form of agreement termination, as a general rule, it should be in writing. This is due, among other things, to evidential reasons – it would be difficult to prove (e.g., in court) the fact of "submitting" a verbal notice of termination. However, the content of the notice itself should include elements such as: 

• designation of the place and date (although the date of delivery will naturally be the most important); 
• the details of the party terminating the agreement and the details of the other party to the agreement (“recipient” of the termination); 
• heading (e.g. "termination" or "termination of the contract"); 
• information identifying the contract to which the termination relates (e.g. contract number or date of its conclusion); 
• information regarding the notice period (i.e. when, in accordance with the intention of the person terminating it, the contract will cease to be valid); 
• salutation and handwritten signature. 

Termination It is essentially a straightforward document, but its content should unequivocally (to avoid unnecessary doubts) indicate the contract it concerns, and the party (person/entity) submitting it – and also (of course) contain their signature. It should also be remembered that for the effective termination of the contract, delivery is necessary. In the event, therefore, of not being able to hand over the written notice personally to the other party (with a receipt on a copy of the document!), one may use the post, choosing however such a form of dispatch that will allow us to obtain confirmation of both the fact of delivery and its date. i.e. sending it by registered mail.In accordance with the Civil Code that keeps up with the times (unless otherwise stipulated in the contract) – termination of an agreement drawn up in writing requires the documentary form – meaning it can also be done by email. Piotr Kłodziński – Legal Advisor Warsaw Legal services for companies in Warsaw