What is the termination of a contract?

In Arizona, the termination of a contract is the process of ending the agreement in place between two parties. This can occur in a few different ways including both parties agreeing to end the contract, one party breaching the contract, or a party filing a court action terminating the contract. When both parties agree to end the contract, they typically execute a new document called a “Termination Agreement” or “Release”. A termination agreement typically contains the following: 1) a description of the contract that is being terminated; 2) the date of termination; 3) the names of both parties; and 4) any additional provisions agreed to by both parties. When one party breaches the contract, the other party may be able to terminate the contract and seek relief from a court. This type of termination may be done in two ways: seeking a court’s specific performance of the contract or seeking a court to cancel the contract. Finally, a party can file a court action asking to terminate the contract. This type of termination typically occurs when one of the parties has faced some type of financial hardship that has made it impossible for them to fulfill their responsibilities under the contract. Courts in Arizona will only grant a termination if there is a legitimate basis and the other party will not suffer any substantial damages.

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