Employment Contract Termination

In a general sense, a contract is a binding legal agreement, or an exchange of promises between two parties enforceable in a court of law. Most contracts are entered into orally, but they are written if the parties require proof of the agreement. If the contact is broken and the promises it describes are not fulfilled, the law provides a remedy. Employment contracts are terminated when their obligations are completed. There are times when parties cannot or will not complete these obligations under the contract, and the contract is terminated due to rescission, breach of contract, or impossibility of performance. The contract usually delineates how termination of a contract occurs, often done by written notice. Employment contracts are either terminated voluntarily, when an employee decides to leave on his or her own, or involuntarily, when the employee's departure is initiated by the employer.

Fast Facts

  • Rescission occurs when either one party has the legal right to end the contract, or when both parties agree to terminate it.
  • Breach of contract occurs when one or both parties fail to perform an obligation described by the contract.
  • Impossibility of performance occurs when the contract is terminated due to an unforeseen contingency that prevents the contract from being fulfilled.

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