Cancellation for Breach, by
Seller
You
are hereby officially notified and put on notice that our contract dated
___________, termed the __________________ Agreement is cancelled for cause as
a result of your breaches, as described in the Agreement itself.
Among
the breaches are the following:
You
are further notified and put on notice as required by UCC regulations that any
obligation to make further performance under the Agreement is terminated, and
that the right to proceed against you because of your breach of the Agreement
is not waived.
You
are further notified that as a result of your breach of the Agreement, we have
suffered damages in the amount of $
__________________, computed as follows:
We expect you will make good on these damages and will
expect to receive them within the next 30 days.
If this is not possible, please contact us to set up a payment schedule
so we can avoid legal expenses on both sides.
Yours
very truly,
_______________
Authorized
Employee
Cancellation for Breach, by Seller
Review List
This
review list is provided to inform you about the document in question and assist
you in its preparation.
1.
Prepare
this letter and send it, along with the underlying contract, to your lawyer.
Rarely does an agreement cancellation go uncontested. Since litigation takes an extended period of
time, unless settled along the way, it is very expensive to act in haste and
repent at leisure, as the old cliché goes.
This letter is generally used as the initial tactic to get out of an
agreement. You need to consult your
lawyer, and a litigation lawyer if suggested by your lawyer, about the best way
to proceed. Please note that the letter
itself is similar to that for Agreement Cancellation. The underlying approach, however, differs
somewhat.
2. A
seller's right to cancel an agreement is determined by the contract itself and
the law in general. The governing law in
most states is the Uniform Commercial Code (UCC). Make sure that you are legally entitled to
cancel the contract before sending this notice.
You need to consult a lawyer to get proper answers to this
question. In many cases, as one would
expect, the answers are ambiguous. In
those cases, you must weigh the business and legal ramifications of your
decision; consulting with your attorney on this is usually a vital component of
a satisfactory conclusion. As the
seller, however, you have certain advantages in cancellation because it is more
unusual to be done (i.e., sellers generally need buyers more than the reverse,
so your cancellation will stand out, which, to some extent will influence a
court in your favor, should it come to that).
3. In
summary, these kinds of letters tend to be tactical approaches to resolve a
business situation. As a rule, no
solution is satisfactory to both parties.
You must try to seek out a solution that is the least painful and most
acceptable to the parties. As we often
say in our Negotiations Handbook CD, “It was a perfect compromise; both parties
were equally unhappy with the result.”
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