Management summary
- Contract termination (“withdrawal”) cancels the contract retroactively, as if it never existed.
- Always confirm you have a valid legal or contractual ground—otherwise you risk a dispute and damages liability.
- Your notice must be properly drafted and, most importantly, provably delivered to the other party.
- After termination, both parties must return what they received; damages or contractual penalties may still apply.
- The most common mistakes are vague grounds, missing formal requirements, and terminating without a legal basis.
Table of contents
Click the section you are interested in.
- Contract termination template with ARROWS lawyers’ commentary
- When you can terminate a contract
- Who to contact
- What is the difference between termination and notice?
- FAQ – Legal tips on grounds for termination
- Formal correctness is key
- Risks of an invalid or defective termination
- What happens after contract termination?
- FAQ – Most common legal questions on contract termination
- FAQ
Contract termination template with ARROWS lawyers’ commentary
This template is intended as a basic guide. To ensure legal certainty, we strongly recommend tailoring the document to your specific situation—ideally after consultation with a lawyer.
Terminating party: [Your company name / Full name]
Company ID (IČO): [Your company ID]
Registered office: [Your registered office / address]
Registered in the Czech Commercial Register maintained by [court], file no. [section], [insert no.]
Other contracting party: [Company name / Full name]
Company ID (IČO): [Other party’s company ID]
Registered office: [Other party’s registered office / address]
In [City], on [Date]
Subject: CONTRACT TERMINATION (WITHDRAWAL)
Dear Ms/Mr [surname],
we hereby, in accordance with [insert contract clause, e.g. Article X of the contract] and/or [insert applicable legal provision, e.g. Section 2002 of Act No. 89/2012 Coll., the Czech Civil Code], withdraw from the Contract for Work (the “Contract”) concluded between us on [date of conclusion].
ARROWS note: Always identify the contract precisely (title, date, parties) to avoid any ambiguity.
The reason for this withdrawal is a material breach of contractual obligations on your part, consisting in [describe the breach specifically and in detail, e.g. failure to deliver the work even within an additional reasonable deadline, delivery with non-remediable defects preventing use, etc.].
ARROWS note: The grounds for termination are critical. They must be specific, true and provable. Generic statements are not sufficient.
As a result, the Contract is cancelled from the outset. We request the return of all performance provided under the Contract, specifically the refund of the advance payment in the amount of [amount] CZK, within 15 days of delivery of this notice to our bank account no. [your account number].
Kind regards,
[Your full name]
[Your position]
[Your company name]
Well-structured contracts are a foundation of doing business. If you need your contracts drafted or reviewed, the team at ARROWS can help you set clear rules for enforcement, liability, penalties and termination rights.
When you can terminate a contract
Termination (withdrawal) is a radical but sometimes necessary step that cancels a contract retroactively. Before taking it, you must be certain you have a valid legal ground. Otherwise, you may expose yourself to the risk of being sued for breach of contract and damages.
Grounds for termination generally fall into two categories:
- Statutory grounds: The most common is a material breach by the other party. Examples include failure to deliver on time, delivery of defective goods, or failure to pay the purchase price.
- Contractual grounds: A well-drafted contract usually includes specific termination triggers agreed by the parties.
Carefully prepared contracts—especially clauses defining termination rights—are key to legal certainty in business. Lawyers at ARROWS focus on drafting and reviewing contracts that actually protect clients in real disputes.
Who to contact
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What is the difference between termination and notice?
These terms are often confused, but their legal consequences are different. Notice (termination by notice) ends the contract going forward (typical for leases or employment). Withdrawal (termination) cancels the contract retroactively, as if it never existed. That usually triggers a duty on both sides to return what they received.
FAQ – Legal tips on grounds for termination
1. What does “material breach of contract” mean?
It is a breach that the breaching party knew or should have known at the time of contracting would lead the other party not to conclude the contract if they had foreseen it. In practice, it often involves missing key deadlines or delivering fundamentally unusable performance.
2. Can I terminate even if the contract does not explicitly mention termination?
Yes, if statutory grounds exist—for example a material breach by the other party. However, contracts often specify, expand or clarify the statutory grounds, which may make your position stronger.
Formal correctness is key
Withdrawal is a unilateral legal act. For it to take effect, it must be delivered to the other contracting party. We strongly recommend a provable method—ideally via Czech data box (datová schránka) or registered mail with confirmation of delivery. The notice must clearly and specifically state the reason for withdrawal.
An invalid withdrawal may be treated as a breach of contract on your side, which can lead to damages liability. This is why reviewing the document before sending it is often essential.
Risks of an invalid or defective termination
If the termination process is handled incorrectly, it can cost your company significant money and create additional legal complications. Below are typical risks and how ARROWS can help you avoid them.
| Risk and potential consequences | How ARROWS helps |
|---|---|
| Termination without valid grounds – the other party may sue you for damages caused by unjustified withdrawal. | Legal assessment – we confirm whether you have valid grounds and recommend the safest course of action. |
| Formal defects – missing grounds, incorrect identification, or failure to deliver properly. The withdrawal may be invalid and the contract may remain in force. | Drafting a compliant notice – we prepare a document that meets all formal and substantive requirements. |
| Dispute over validity – the other party rejects your grounds and refuses to return what they received. | Dispute resolution and litigation – we represent you and prove the validity of your termination if needed. |
What happens after contract termination?
Once a valid withdrawal is delivered, the contract ends. Both parties typically have a duty to return what they received under the cancelled contract (restitution). Importantly, withdrawal does not automatically eliminate claims for damages or contractual penalties if they arose before withdrawal.
If the other party is based abroad, returning the performance may become more complex. Thanks to our international experience and network, ARROWS can support cross-border enforcement and dispute resolution.
| Risk and potential consequences | How ARROWS helps |
|---|---|
| The other party refuses to refund/return performance – claims the withdrawal is invalid or imposes unreasonable conditions. | Enforcement of unjust enrichment claims – we draft a pre-action letter and file a claim if needed. |
| Dispute over the amount to be returned – disagreements over depreciation, scope of works, or partial performance. | Negotiation and representation – we help you reach a fair settlement or defend your position in court. |
| Cross-border complications – different legal systems, language barriers, and complex service of documents. | International legal support – we use our network and experience to resolve your case efficiently. |
Contract termination is a powerful tool, but incorrect use can cause more harm than benefit. With long-term experience and a large base of corporate clients, ARROWS helps ensure your steps are legally sound and commercially reasonable.
FAQ – Most common legal questions on contract termination
1. Can I terminate only part of a contract?
Yes, in some cases—if the performance is divisible. For example, if a supplier delivered only part of the agreed items, you may be able to withdraw only as to the undelivered part. Each case must be assessed individually.
2. Does termination eliminate my claim for contractual penalties?
No. A contractual penalty claim arising from a breach before withdrawal generally remains. The same applies to damages claims.
3. What if the other party “does not accept” my termination and insists the contract continues?
Withdrawal is unilateral and does not require the other party’s consent. If valid, it takes effect upon delivery. If the other party disputes validity, the matter may need to be resolved in court.
4. Is there a deadline for terminating a contract?
Yes. The right to withdraw must typically be exercised without undue delay after you learn of the grounds. Waiting too long may be seen as acceptance of the breach.
5. Can I revoke my termination notice?
Not unilaterally. Once a valid withdrawal is delivered, the contract ends. It can only be restored by a new agreement between both parties.
Disclaimer: The information in this article is provided for general informational purposes only and does not constitute legal advice. While we strive for accuracy, Czech laws and their interpretation may change over time. For confirmation of current legal requirements and their application to your specific situation, please contact ARROWS (office@arws.cz).
We accept no liability for any damages or complications arising from the independent use of the information in this article without prior individual legal consultation and professional assessment. Each case requires a tailored solution.
FAQ
How do I know if I have valid grounds to terminate?
Most commonly, valid grounds are a material breach of contract or a termination trigger expressly agreed in the contract. Without valid grounds, withdrawal may be invalid and you may be liable for damages.
Must the grounds be stated in the termination notice?
Yes. The grounds should be clear, specific and provable. Vague wording significantly increases dispute risk.
How should I deliver the termination notice?
Use a provable method—ideally a Czech data box (datová schránka) or registered mail with confirmation of delivery. Delivery is crucial for effectiveness.
What happens after a valid termination?
The contract ends retroactively and both parties must return performance. Claims for damages or contractual penalties may still remain.
Can the other party challenge my termination?
Yes, typically by disputing the grounds or formal requirements. If the dispute cannot be resolved by agreement, a court may decide.
Can I terminate only part of the contract?
Yes, if performance is divisible. However, the specific contract structure and facts must be assessed carefully.