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Sample Letter of Cancellation of Business Contract

written by: Ivana Banks•edited by: Ronda Bowen•updated: 10/24/2010

Occasionally, business contractual agreements do not always work out. If you find that this is the case for your business, please read this article to view a Sample Letter of Cancellation of Business Contract.

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    Why You Need a Letter of Business Cancellation

    Often times, parties who have entered into a contractual agreement may find that the arrangements are no longer useful to their business needs. For a variety of reasons businesses will have to cancel a business contract but should know how to handle it appropriately. Therefore, if you need to cancel a contractual agreement, you should know the essentials of what must be contained in a letter of cancellation of a business contract.

    Reasons For a Letter of Cancellation of Business Contract

    There are many reasons why businesses choose to write a letter of cancellation on a business contract. In fact, not all contractual shaking hands agreements will work in the best interest of both parties and will have to be canceled. Mainly, the reasons why most businesses decide to write a cancellation letter is due to the following:

    • Poor service or product
    • Contractual misunderstandings
    • Product or service is no longer useful or needed
    • Product or service was not delivered in a timely manner

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    Key Components

    If you decide to write a letter of business cancellation, you must include key information that supports your decision to cancel the contract. When writing, make sure that you clearly, concisely, and factually state any pertinent facts. Also, include how your account will be settled if there is an outstanding balance owing on the account. Assure the party that you can be reached at the contact information provided for any questions or concerns. Keep your tone professional, short, and to the point.

    Furthermore, you should include the following 7 key elements in your letter of business contract cancellation:

    1. Date
    2. Return address
    3. Person or business being addressed
    4. Reference number or account number
    5. Summary of the facts
    6. Settlement of account
    7. Signature of deciding party
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    Letter Format

    The letter should be typed on a standard 8 ½ by 11 inch piece of paper using black ink. The best type of business style fonts is the Times New Roman or Aerial, with a size 12 point font.

    When formatting your letter, it is best to use the block format method. The letter should be written in single-space format.

    Letter of Cancellation Business Contract

    Here are a few sample letters of cancellation business contracts. Depending on your particular situation, use the letter that best suits your needs. Of course, you should also alter the document details to fit your particular business situation. (Click on the image to enlarge.)

    Letter of Cancellation 

    Letter of Cancellation 2 

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    In conclusion, you should request that the recipient company confirms receipt of the cancellation business contract letter. Most importantly, even if they have confirmed receipt of the cancellation business contract, do not destroy the original contract or letter of cancellation. You should retain these records for several months in case mistakes or misunderstandings occur. If a mistake should occur, you will have all of your original documents to reference.

    Image Credit: razvan ionut

    Sample Letter Sources: