29 de august de 2025

What is the deadline for contract termination and how do I formalize it?

The formalization of business transactions and agreements is an essential part of civil and business relationships. However, a contract does not always continue until its natural end. For various reasons, parties may choose to terminate the contract early, a situation in which a termination agreement applies. But after all, what is the deadline for contract termination? How can I properly formalize this decision?

In this article, I will explain in detail the concept of termination, its types, deadlines, formalization, and the differences in relation to contract termination, in addition to presenting the provisions of the new Termination Law.

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What is a contract termination?

A termination is a bilateral legal act that consensually terminates a contract, that is, with the willing agreement of all parties involved. Also called contract termination by mutual consent, a termination nullifies the effects of a previously signed contract, establishing the conditions and consequences of such termination.

According to Article 472 of the Brazilian Civil Code: “The termination shall be made in the same manner required for the contract.” This means that if the original contract was in writing and notarized, for example, the termination must follow the same format.

This requirement guarantees legal certainty for the parties and allows pending obligations or amounts due to be properly formalized.

How does a contract termination work?

A termination occurs when all parties involved in the contract mutually agree to terminate it before the initially established term, or before the completion of its purpose. This document defines the terms and conditions of the termination, including:

Reasons for the termination;
Legal and financial consequences;
Possible penalties;
Refunds or compensation of amounts;
Conditions for the termination of obligations.

A termination allows both parties to formalize the rights and obligations resulting from this termination, avoiding future conflicts and ensuring transparency.

How important is a contract termination?

A termination is essential to ensure legal certainty and avoid legal disputes. By documenting the mutual will to terminate and the agreed terms, the parties protect themselves from undue charges or liabilities in the future.

Furthermore, a termination allows for:

Tax and accounting regularization, especially in business contracts;
Defining compensation or fines;
Setting deadlines for vacating properties or returning assets;
Preventing lawsuits arising from differing interpretations of the contract’s termination date.

In real estate transactions, for example, a termination formalizes the return of amounts paid, with or without withholding fees, in accordance with the new Termination Law, regulated by Law No. 13,786/2018.

What are the types of termination?

There are different forms of termination, which vary depending on the nature of the contract and the circumstances of its termination. The main types are:

Bilateral termination: when both parties agree to terminate the contract amicably;
Unilateral termination (unilateral termination): permitted only in contracts where the law or the contract itself provides for this possibility, such as employment relationships or the provision of ongoing services;
Partial termination: when the parties agree to terminate only certain clauses or obligations, keeping the remainder of the contract in force;
Judicial termination: occurs when one of the parties requests termination through a court order, usually due to noncompliance with contractual clauses.

Bilateral Termination

The most common type of termination occurs when the parties agree to terminate the contract and establish conditions for its termination.

Unilateral Termination

More restrictive, this is only possible when there is an express clause in the contract or a legal provision. Example: a service provision contract with the possibility of termination with prior notice.

Partial Termination

Allows for specific adjustments, such as the cancellation of an ancillary obligation, without completely terminating the contract.

Judicial Termination

Requested in court when there is a conflict, noncompliance, or impossibility of amicable resolution.

What is the deadline for canceling a contract?

Brazilian law does not establish a specific deadline for formalizing a contract termination. The deadline depends on the nature of the contract and the conditions stipulated by the parties. Some common situations:

Contractual term: the contract itself may provide conditions and deadlines for termination or cancellation;
Notice period: service contracts may require 30 days’ notice, unless otherwise agreed;
Legal term: in real estate contracts, Law No. 13,786/2018 establishes specific rules for canceling the purchase of off-plan properties.

In the absence of a legal or contractual deadline, it is recommended that the termination be formalized as soon as the parties decide to terminate the contract, in order to avoid the risk of collections or enforcement of subsequent obligations.

How to formalize a contract termination?

The termination should be formalized using the same format as the original contract. If the contract was verbal, the termination may be verbal, although it’s always ideal to reduce it to writing.

If the contract was formalized in writing, it is recommended to prepare a contract termination instrument containing:
Complete identification of the parties;
Reference to the original contract (date, purpose, and number, if applicable);
Declaration of mutual agreement for termination;
Stipulation of financial consequences, fines, and refunds;
Date and signatures of the parties and witnesses, if possible.

For contracts registered with a notary public, it is advisable to notarize the signatures and file the document with the notary public or commercial board, as applicable.

How to terminate a contract?

The procedure for drafting a contract termination involves several essential steps:

Analysis of the original contract: check termination clauses and penalties;
Negotiation between the parties: define terms, compensation, and refunds;
Preparation of the termination instrument: draft clear and complete clauses;
Signature of the parties: preferably with witnesses;
Notarization (optional, but recommended);
Filing the document: with a notary or commercial registry, if necessary.

Contract Termination Template

Here is a simplified example of a contract termination:

PRIVATE CONTRACT TERMINATION INSTRUMENT

By this instrument, [NAME OF PARTY A], registered with CPF/CNPJ no. [number], and [NAME OF PARTY B], registered with CPF/CNPJ no. [number], resolve, by mutual agreement, to terminate the service provision contract signed on [date], regarding [subject of contract], under the following conditions:

The parties declare their contractual obligations terminated;
It is agreed that [Party A] will pay [Party B] the amount of R$ [amount] as compensation;
The parties waive any rights, claims, or legal actions related to the terminated contract.

And in agreement and agreement, they sign this instrument in [number] copies of equal content and form.

[Place], [Date]

Signatures:

Party A

Party B

Witnesses:
Name: __________________ CPF: ______________
Name: __________________ CPF: ______________

What does the new Termination Law say?

Law No. 13,786/2018, known as the Termination Law, specifically regulates the termination of purchase and sale contracts for off-plan properties. Key points include:

The possibility of retaining up to 25% of the amount paid by the buyer in the event of cancellation;
Maximum terms for refunds, which vary between 30 and 180 days after the termination;
Requirement for a specific termination clause in the contract;
Greater protection for construction and development companies in the event of cancellations.

Although limited to the real estate sector, the Law brought greater legal certainty and transparency by defining percentages and deadlines for refunds.

What is the difference between contract termination and rescission?

Although used interchangeably, there is a technical difference:

Termination: consensual termination, by mutual agreement;
Rescission: unilateral termination of noncompliance, which may occur judicially or through extrajudicial notification.

In short, termination is amicable, while termination may be motivated by non-performance, inability to perform, or a unilateral decision.

Conclusion

Contract termination is an indispensable tool for terminating contracts in an orderly and legal manner. Whatever the reason, formalizing the termination ensures legal certainty, prevents litigation, and ensures the rights and obligations of all parties involved. Adhering to the deadlines and forms of termination, as provided in the original contract or applicable legislation, is essential to avoid future problems.

Whenever possible, seek specialized legal advice to analyze the contractual clauses and advise on the best way to draft and formalize the termination, especially in real estate, service provision, or corporate contracts.