How to End a Vendor Contract Early and Stay Friendly

Samir Sampat

In business, contracts are a part of day-to-day operations. Therefore, you’d think most companies would have them down and know how to navigate them in every potential outcome. Unfortunately, that’s not possible because any number of variables can change the terms and relationship of a contract in a matter of seconds. In some instances, it becomes an issue of figuring out how to get out of the contract without killing the relationship with the vendor at the same time. 

Although there are several tips to consider, it starts with honest communication and respect. You aren’t going to forge lasting relationships by cutting ties or lying about why you’re ending things. Your vendors deserve the truth and you need to give it to them. Of course, the way that you deliver the message will impact whether or not you continue to have a relationship, so that’s where your focus needs to be. 

If at any time, you have concerns about laws or the legalities of your contracts, it’s a good idea to consult with a lawyer that understands these agreements and how they should be executed. Here are some other things to keep in mind. 

Be proactive with a termination clause 

Perhaps the best way to get out of a contract without creating bad blood is to begin the contract with what is known as a termination clause. This little gem is easy enough to write up and it allows either party to end the contract at any time if they believe (and can prove) that the terms are not being met, or that the contract will not be able to be fulfilled. This allows you to set clear boundaries and expectations from the jump. By having this written into the contract, everyone knows from the beginning that if things don’t work out, it’s no hard feelings all around. 

Submit notice in writing (and in advance)

Another respectful way to keep a good relationship with a vendor is to submit a professionally written notice that you will be terminating the contract. Don’t offer a lengthy explanation or say anything that could later be used against you legally, but make sure that you’re clear, inform them of what is happening and when it will take effect, and give them plenty of advance notice. 

Especially when it’s unexpected, having that extra notice can make all the difference. 

Clearly explain how the terms aren’t being met 

If you can clearly and directly point out the problems with the contract or have proven examples of how the terms are not being carried out, you should present these to the vendor. Not only will it help them understand why you are terminating the contract, but it will allow them to make improvements in the future. In some cases, they may even want to try to help you out instead of ending the contract. After all, they might not have realized anything was wrong until you spoke up. 

Suggest a renegotiation instead of termination 

Speaking of helping you out, one great way to save relationships is to suggest that perhaps you should renegotiate the contract instead of ending it. By advising the vendor that terms aren’t being met or that the contract cannot be fulfilled, you will be able to communicate clearly about the next steps and decide what is going to be the next best move. If you were to just burn the contract and walk away, you’d miss this opportunity to not only maintain a relationship but create a more effective contract for everyone involved. 

Don’t end the contract without the vendor’s input 

It can be tempting to assume that since the terms aren’t being met, the contract can’t continue and will never be properly executed. Thus, you’ll want to notify the vendor that you’re terminating the relationship and moving on to someone who can deliver what you need. However, you don’t know why the vendor isn’t living up to their end of the deal. You aren’t certain what’s gone wrong until you communicate with them and take the time to get their input. 

A surefire way to lose business (and valuable reputation points) is to terminate contracts without giving the vendor a chance to collaborate, fix things, or at least be aware of what’s coming. 

Why save the relationship?

Some people might be wondering if they need to save the relationships in the first place. After all, if a vendor can’t live up to their contractual obligations, why would you want to continue to work with them? For starters, it might not be that they aren’t capable of delivering on all contracts, but that your terms just need some tweaking. 

Another consideration here is what you might need in the future. Right now, you might not think this vendor will come in handy again. However, you can’t guarantee the future of your business, including what kind of services or relationships you may need down the line. It’s best not to burn bridges if you don’t have to. When you end contracts on good terms, it also bolsters your professional image and reputation

While you’re saving your relationships, who is starting the new ones?

You have a lot to juggle in business, including managing your vendor relationships, client relationships, and more. If you’re tied up with existing contacts, who is getting new business in the door? When you partner with the dedicated virtual receptionists from Smith.ai, you’ll get the assistance of a 24/7 answering service that can also handle live website chat, appointment scheduling, lead intake, and so much more. 

We can even help you create some winning outreach campaigns and offer assistance with outbound sales to help generate the leads in the first place, giving you a total solution for your communications, admin, and more. Plus, it all comes with a strategy that’s customized to meet your needs and make sure that we take care of every last detail. 

To learn more, schedule a consultation to discuss what the 24/7 virtual receptionists at Smith.ai can do for your business. You can also reach us at hello@smith.ai or (650) 727-6484.

Samir Sampat

Samir Sampat is a Marketing and Events Associate with Smith.ai. He has experience working with businesses of all sizes focusing on marketing, communications, and business development.

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