How to End a Business Contract in Australia: The Termination Notice, Step by Step

To end a contract with a supplier, contractor or service provider, start with the contract itself. Find the termination clause, check what it lets you do, how much notice it needs and how notice must be given. Then send a written notice that quotes that clause, states the date the contract ends and sets out the handover, and keep proof that it was sent.

Claim Done drafts a Notice to End a Business Contract from your answers for a flat A$49. It relies on the clause you quote, states the end date and lists the handover, and you approve it before it is sent.

Read the termination and notice clauses first

Your contract is the first place to look, because its own wording sets out how it can be ended. The government’s small business site, business.gov.au, says a termination clause should cover:

• the situations the clause covers, such as a breach of contract or ending by agreement
• how much notice each party has to give, for example 30 days
• how notice has to be given, for example by email or letter
• what money is payable if the contract ends, such as penalties, refunds or compensation
• what happens to other clauses, such as confidentiality or intellectual property.

Write down the clause number, its words and the notice period. Then find the notices clause, which may name an address, email or person that notices must go to.

Three ways a business contract usually ends early

Ending under a notice clause (for convenience)

According to business.gov.au’s guide to ending a contract, some contracts have a clause that lets one or both parties end the contract for any reason, even if the other party has done nothing wrong. This is called ending for convenience. These clauses are common in technology supply and long-term service contracts. Check the notice you must give and any money payable on ending. If a fixed term is ending and you do not want it renewed, check for an automatic renewal and the date you must give notice by.

Ending by agreement

If you both want to finish early, the same guide says a contract can end by agreement, and you should put that agreement in writing. Both sides sign it. It is not a one-sided notice.

Ending for breach, and the risk of getting it wrong

Business.gov.au says you can only end a contract for breach if the breach is serious. That usually means the breach affects the core purpose of the contract, causes significant loss or damage, or shows the other party will not meet their obligations. Some breaches only allow you to claim damages.

The risk is real. If you end a contract without a valid reason, business.gov.au warns, the contract may still be in effect, you might need to meet your obligations, and the other party could take legal action against you. It says to review the contract, assess how serious the breach is, and get legal advice first.

Check whether your contract requires a notice to remedy before you can end it for breach. For contractors, business.gov.au says a notice to remedy gives the contractor a chance to fix the work, and should set out what needs fixing and a reasonable time to fix it.

Unfair terms in small business contracts

Some supplier and software contracts are pre-written, take-it-or-leave-it documents. The ACCC calls these standard form contracts, and the law presumes a contract is one unless the party that prepared it proves otherwise. A term is unfair if it causes a significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the party it favours, and would cause financial or other harm if enforced. Its examples of terms that may be unfair include terms that let only one party end the contract, or that penalise only one party for ending it.

The rules changed on 9 November 2023. From that date, proposing, using or relying on an unfair term in a standard form contract made or renewed from that date is banned, and penalties apply. For a new or varied standard form contract from that date, a small business is covered if it has fewer than 100 employees or less than $10 million in annual turnover. A contract made before that date and not renewed or varied since falls under the earlier test: 20 or fewer employees, and an upfront price under $300,000, or $1 million for contracts lasting more than 12 months.

Only a court can make a final decision on whether a term is unfair. If a court decides a term is unfair, it is void and no longer applies, and the rest of the contract continues if it can. The ACCC suggests first asking the business to remove or change the term. Your notice can also state that you do not accept that an unfair term, such as an exit fee, applies.

What your termination notice should say

1. Both parties’ legal names, exactly as they appear in the contract.
2. The contract: its title, its date, any renewal date and what it is for.
3. The clause you rely on, quoted with its number and words.
4. For a breach, the facts and the date you gave notice to remedy, stated as your account, not as a finding.
5. The date the contract ends, which must allow the full notice period the clause requires.
6. What happens to money: a final invoice, prepaid fees you want refunded, or an exit fee you dispute.
7. The handover: return of your property, equipment and confidential information, a copy of your data, and ending access.
8. A request that the other party confirm receipt in writing by a set date.

The structure of a notice of termination

A guide to the order, not a fill-in-the-blanks form:

• Heading: both parties’ names, the date and the notice address.
• RE line: “Notice of termination” with the contract’s title and date.
• Notice: you are ending the contract under the named clause, on a stated date.
• The clause: the clause quoted in full.
• The reason: only for a breach. The facts and your earlier notice to remedy.
• Handover: numbered items, each with one date.
• Money: your position on invoices, refunds or fees.
• Unfair term: only where it applies.
• Confirmation: confirm receipt and handover within 14 days.
• Sign-off: rights that arose before the end date are kept; signature.

How to send it and what to keep

Send the notice the way the contract’s notices clause says, to the address or email it names. If the clause requires post or hand delivery, use that method, even if you also send an email. If the contract is silent, send it in writing to their usual business address and email.

Business.gov.au tells businesses dealing with a supplier problem to keep records of their communication, because they may be needed if the matter goes further. Keep:

• a signed copy of the notice and the contract
• the sent email, with its date and time
• postage receipts or tracking for anything posted
• any notice to remedy, and the other party’s replies.

What happens next, and if they push back

Work through the handover by the dates in your notice. Check the contract for duties that continue after it ends, such as confidentiality.

If the other party disputes the termination or an exit fee, the business.gov.au disputes guide suggests talking to them and keeping a record, then writing to them. If that fails, you can try alternative dispute resolution such as mediation, get a lawyer, or go to a court or tribunal, which may make you try alternative dispute resolution first. Small business commissioners in New South Wales, Victoria, Queensland, South Australia and Western Australia offer advice and low-cost or subsidised mediation. The Australian Small Business and Family Enterprise Ombudsman may also be able to help.

Mistakes to avoid

• Giving less notice than the clause requires. Count the full period before you pick the end date.
• Ending for a minor breach, or skipping a required notice to remedy.
• Adding claims or accusations you cannot support. Rely on the clause and the facts.
• Forgetting your data, equipment and prepaid fees until after access is cut off.

This notice suits supply, service, software, subscription, contractor and consultancy agreements, not employment contracts, leases or franchise agreements, which have their own rules. When you are ready, start your notice to end a business contract for A$49.