Writing a Consulting Agreement Termination Letter [Free Sample]

Consultants are often used by small and large businesses for one-time or on-going projects. When the business no longer needs the consultant’s services, or if the consultant is not performing up to the company’s expectations, it may be time to terminate the relationship.

It will be necessary to write a termination letter. Even though the consultant is not a permanent employee of the company, it is important for the human resources department or business owner to terminate the consultant with the same professional politeness and tact that would be used for a permanent employee.

Most Consultants Work On A Contract Basis

Most consultants work on a contract basis with different businesses. The contract should clearly express the duties of all parties involved. 

Each state has its own contract laws, so the person writing the contract should be a contract attorney or first learn the contract laws of the state in which the contract will be signed.

Most Legally Binding Contracts Must Contain:

  • An offer to give services or a request to have services
  • Acceptance of those services
  • Valid consideration that both parties promise to uphold
  • Mutual assent that both parties agree with the terms of the contract
  • A legal purpose

A consulting contract should have a termination provision. This will give the method for terminating the contract before the completion of services. 

The termination clause may contain the amount of notice that must be given by both parties and how any remuneration will be handled.

For example, the contract may state that either party can terminate the contract with or without cause if they give 30-days’ notice.

It could also state that if one party is not satisfied that the other party has fulfilled its contractual obligation, the first party has cause to terminate the contract without prior notice.

When terminating a contract, one party may be happy with the services but no longer requires them. 

They may say that while the other party’s services were excellent and appreciated, the company has decided not to continue the program, hence, they are terminating the consultant’s contract.

positive testimonial

If a consultant is good, it is always better to give him or her a positive testimonial even if the contract is being terminated. 

This will allow the consultant to prove that they were not terminated for any lack of proper or professional business practices.

If the consultant’s service is less than stellar, the company will need to give proof that the contract terms were not fulfilled or state that the termination clause is being used. If this is the case, the person writing the letter should still be polite and courteous.

If the consultant’s work was good, but the company wants to hire an in-house person to handle that work, this could be mentioned, so the consultant knows he or she fulfilled the company’s expectations.

This is also true if the business can no longer afford the consultant and needs to terminate him or her because of financial constraints.

Below is a sample consulting agreement termination letter. It should be written in formal business-letter style and should be sent by registered mail, which will give a return receipt. 

This is for proof that the letter to terminate the contract was received in the event any legal issues arise later about the contract.

Sample Consulting Agreement Termination Letter

Name of Sender
Name of Sender’s Business if Applicable
Address of Sender’s Business
City, State, Zip Code

DATE

Name of Consultant
Name of Consultant’s Business if Applicable
Address of Consultant
City, State, Zip Code

RE: Consulting Agreement Termination

Dear Name of Consultant:

This letter is formal notice that the consulting agreement contract that Name of Company enter into with your consulting firm Name of Firm on DATE, will be terminated on DATE according to the guidelines that are stated in the contract.

These guidelines state that if either party of the contract can show that the other party did not fulfil the expectations of the contract, the first party has the right to terminate the contract before the completion of services.

As per the contract, your organization was to provide training in the use of specified software for our employees. 

The contract states that you will send two trainers on Mondays, Tuesdays and Thursdays from 9am – 12pm, to train new employees in Photoshop, and other software use.

According to our records, your trainers have been absent on more days in the past month than they were present. Because of this, our employees are lacking in the skills they require to do their jobs.

This has not only caused disappointment, but also financial setbacks, as we have not been able to fulfil our customers’ orders in a timely fashion. Enclosed is a copy of our digital attendance record.

For this reason, we have decided to terminate the contract. If you have any questions, I can be reached at Phone Number or at Email Address. 

Since payment was given only on attendance, there is no question of further remuneration.

Please sign the enclosed copy of this termination letter and send it to me at the above address.

Sincerely,

Signature of Sender
Printed Name of Sender
List of Enclosures: Attendance records, copy of letter

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