What is it and when to use it

An agreement to terminate an obligation allows both parties to mutually cancel their duties, so that no one is bound anymore.
It is peaceful, simple and legally binding.

Common use cases:

• ending business cooperation early

• cancelling contracts before performance

• no longer needed service or delivery

• closing down startup collaboration

• avoiding litigation or future claims

Legal framework

Regulated by Section 1980 of the Czech Civil Code.
Once both parties agree, the obligation no longer exists and cannot be enforced.

Key elements

• Reference to original contract or obligation

• Statement that both parties agree to terminate

• Confirmation of no further claims

• Effective date (if relevant)

• Signature and date

Common mistakes

• Not specifying what is being cancelled

• Unilateral action without real agreement

• Missing waiver of further claims

• Misunderstanding legal consequences

Recommendations

• Be precise and mutual

• Write it down – even for verbal deals

• Add a clause confirming that no party owes anything more

• Use it to maintain good business relationships

Practice tip

This agreement is perfect for clean exits.
It prevents future disputes, is fast to arrange, and doesn’t burn bridges.

Termination agreement template – symbolic fee

I offer a Czech-English template for contract cancellation by mutual consent.
Useful for freelancers, vendors, business partners or friends.

Contact me via e-mail or form – easy closure, no courts involved.

FINAL THOUGHTS – WHAT NOW?

An agreement to terminate obligation isn’t just a formality – it’s a legal shield, if drafted properly. And a trap, if not.

Do you want to be sure your contract will hold up even in a crisis? Get in touch and let’s schedule a meeting. I am a specialist on contract law – more information here.