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The Supreme Court provides explanations on the unilateral termination of contracts
15.01.2010
The Civil Chamber of the Supreme Court has, in its judgment no. 3-2-1-143-09 of 22 December 2009, analysed the issue of the unilateral termination of contracts. A party to a contract can terminate an obligation arising from the contract by a unilateral declaration of intention above all if the other party breaches the contract. If a party wishes to escape from a contract by a unilateral declaration of intention due to a breach by the other party, the party can withdraw from the contract or cancel the contract both in part or in full. However, the legitimate interest of the other party in the continuation of the contract must be taken into account and the party can be allowed to unilaterally terminate the rights and obligations arising from the contract only to the extent strictly necessary. If contractual obligations are to be performed in parts and fundamental breach of contract is committed only with regard to one obligation or some obligations or one part or some parts thereof, the injured party may withdraw from the contract only with regard to such obligation or part of an obligation. The injured party may withdraw from the entire contract only if the party is justifiably not interested in partial performance or if the breach is fundamental with regard to the contract as a whole.
While the above regulation concerns cases of withdrawal from a contract, in the opinion of the chamber this should, by analogy, apply also to cancellation of a contract, which is a legal remedy that can be invoked in cases of breach of a long-term contract. Based on that, the chamber holds that a long-term agreement can also be unilaterally cancelled both in respect of only some of the obligations stipulated in the agreement if there is good reason for cancelling those obligations or as a whole if the party is justifiably not interested in partial performance.
