Contract disputes and contract termination

Summary

• Contract disputes are a normal part of business, but clear terms and proactive communication can prevent escalation.
• A well-drafted contract reduces interpretation risks and makes dispute handling more straightforward.
• Always document communication and actions when a disagreement arises, and act quickly to minimise damage.
• Understand what your contract says about termination rights, notice periods, and post-termination obligations.
• Even in disputes, maintaining professionalism and learning from experience strengthens future relationships.

Contracts are the foundation — but not always foolproof

Contracts form the backbone of business relationships, but even well-intentioned agreements can lead to disagreements.
In B2B relationships, disputes often arise from how a contract is interpreted or performed.
In the worst cases, a disagreement can result in contract termination — or, in more serious cases, complete cancellation of the agreement.

This article offers practical advice on what to consider in contract disputes and termination situations between businesses.

Preventing disputes starts with the contract itself

The best way to manage disputes is to prevent them in the first place.
A well-drafted contract with clear and specific terms leaves less room for interpretation — and therefore less risk of conflict.

Disagreements often stem from delays, defects, or non-performance.
It’s crucial to specify in the contract:

• What counts as a delay or defect
• What actions are allowed if those situations occur
• How and when the other party must be notified

Equally important is making sure that everyone within your compay knows what has been agreed — especially deadlines, responsibilities, and delivery terms.

When drafting contracts, ensure they clearly define:

• How to notify the other party if you believe a breach has occurred
• When and how disagreements must be reported to avoid losing the right to claim
• What actions can be taken when a breach is suspected
• Whether the contract continues while the dispute is being handled (billing, deliveries, etc.)
• How and where disputes are resolved (court, arbitration, or mediation)
• Which country’s laws apply and in which language proceedings are handled
• How and when the contract can be terminated
• Which clauses remain valid after termination

Act quickly and document everything

When a dispute begins to emerge, review the existing contract immediately and identify what it says about the issue in question.
Minimise potential further damage and document every action taken — including calls, emails, and meetings.

Many disputes can be resolved through early communication and negotiation before they escalate into legal action.
Reaching out quickly to the other party can save both time and money — and may even preserve a valuable business relationship.

If the contract or dispute is significant, consider consulting a lawyer or contract specialist early on.
A professional can help assess the situation objectively and advise on the right course of action — ideally before formal contact with the other party.

Contract termination — what to consider

The right to terminate a contract is usually defined in the written agreement itself.
To avoid misunderstandings, make sure the following are clearly stated:

• Notice period: How long does the contract remain in force after notice has been given?
• Earliest termination point: Is there an initial fixed period before the contract can be ended?
• Grounds for termination: Can the contract be ended freely, or only for specific reasons stated in the contract?
• Termination process: How must notice be given — in writing, by registered letter, or email confirmation?
• Immediate effects: What happens operationally once termination begins?
• Post-termination obligations: Which clauses survive termination (for example, confidentiality, liability, and dispute resolution)?

Being aware of these details protects your company from unnecessary risks and ensures that contract endings are handled fairly and lawfully.

Risk management and lessons learned

Thorough documentation is essential at every stage of a contract — from signing to termination.
It provides evidence that your company has acted correctly and followed good practice if a dispute arises later.

Even though disputes and terminations can be stressful, they can also be constructive learning opportunities.
Maintaining professionalism helps preserve long-term business relationships — and analysing what went wrong helps prevent the same issue in future contracts.

Sharing insights within your organisation ensures continuous improvement and builds a stronger foundation for all future agreements.

Elina Koivumäki is a lawyer who founded Lexperience in 2016 after 17 years in law firms, and she continues to run the company as its entrepreneur. For more than 25 years, she has supported business and non-profit clients in legal matters related to marketing, sales, communications, copyright, and data protection.