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Termination Agreements for Agency and Distribution Contracts
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Prof. Dr. H. Ercument Erdem
Introduction
Execution of a termination agreement is one of the methods to ter-
minate a contractual relationship between the parties. An advantage
compared to a unilateral termination declaration by one of the parties
is that it ensures that the rights and obligations of the parties arising
from, or in connection with, the contract have been satisfied, and reg-
ulates the post-contract relationship between the parties, as well.
Parties are free to determine the principles of termination, the
effective date of termination, and the contents of the termination agree-
ment, to the extent possible under the applicable law. Content should
be determined by taking into consideration the particulars of the main
contract and the parties’ intention. Depending on the parties’ intention,
the termination date may be set as the signing date of the termination
agreement, or a specific date or occasion after the date of signing, as
well as a retroactive date.
If both parties have fulfilled their obligations under the contract
and are satisfied with the other party’s fulfillment, a settlement clause
may be set forth in the termination agreement enabling the release of
the parties from their duties and obligations under the contract, subject
to the conditions of the applicable law. Applicable law and the dispute
resolution venue may be different than that of the main contract.
This newsletter focuses on the characteristics and essential con-
tents of termination agreements that terminate agency and distribution
contracts. While setting forth the common principles applicable to both
types, it also addresses the differences thereof when necessary.
COMMERCIAL LAW
57
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Article of June 2015