What Is a Contract Cancellation Letter?

Basically, a contract cancellation letter is like a request letter, except you are requesting to cancel a contract. This request attempts to end a contract that will be accepted once all parties involved in the contract agree to it. Also, contract cancellation letters are formal documents, especially when they tackle business contracts and agreements. It should properly indicate the plan to cancel a deal, transaction, insurance, membership, event, service, or project. Thus, the letter is generally written by the party who initiates the cancellation until it will be issued to the one he or she made a commitment with.

According to Career Trend, a contract cancellation letter and a contract termination letter are different. Contract termination cuts an existing contract among parties, particularly in real estate, sales, and similar projects; hence, the contract is done. Meanwhile, contract cancellation is more focused on services or subscriptions, meaning the business or service still exists but it is just that the service was canceled for a particular party.

Also, the National Association of Homebuilders reported that the increasing costs of lumber and other housing materials invited a lot of canceled home contracts.

Why Is a Contract Cancellation Letter Important?

A contract cancellation letter is crucial to formally ask for a cancellation of any contract. Without informing the party you have been committed to about the cancellation, it can be offensive and might have you liable for a breach of contract instead. Also, the letter clears things out, especially on the reason behind canceling the agreement. Did you cancel a contract because you were unsatisfied with the services, you can’t keep up with the monthly fees anymore, or maybe you found a cheaper or better option for a contract? What matters most is that you are being honest—but not rude, until the cancellation gets approved much faster.

Contract cancellation letters also give a wake-up call to the party that provides the services. One example is how the National Association of Homebuilders noticed that the increasing costs of lumber and similar housing materials caused a lot of canceled home contracts. That way, the ones in charge of the home contract can survey what caused most of the cancellations, and that factor is what they must improve to keep clients next time. Also, the letter includes a settlement agreement in case you are asking for a refund and other concerns. At least those matters will be talked about instead of going AWOL which can be more chaotic.

The Basic Parts of a Contract Cancellation Letter

You can always personalize a contract cancellation letter’s content. But, you must never forget that this is a formal document and it is better to apply the basic structure that is acceptable by professional standards. And you can craft a professional and complete way of a contract cancellation letter by adding these parts to your letter:

Title: The words ‘Contract Cancellation Letter’ should be visible at the top of the document. It serves as your title and is usually presented in capital and bold letters. The title is important so the recipient or whoever reads the document will understand immediately the letter’s main purpose.Sender’s Details: The one who initiates the cancellation, the sender, or the writer of the letter must input his or her details in the document. This goes from the sender’s name, address, and contact details. That way, the recipient will know who is writing the contract cancellation letter.Date: Do not forget to include the date in the letter. This refers to the date when you are writing the contract cancellation letter. Be sure to consider your schedule seriously because maybe you are unsure if canceling is due or not. Maybe you can’t cancel if you just recently signed the contract. Thus, review the policy of the acceptable dates to send the contract cancellation letter.Recipient’s Details: Besides the sender’s details, the recipient’s details must be clarified in the letter. This is how you address the receiver anyway. Write the recipient’s complete name, address, and contact information. In some cases, you can include the job position or any detail that adds respect to the receiver.Subject: Before writing the important details in the letter, start mentioning the subject of the cancellation first. Indeed, the title is self-explanatory that you are writing for contract cancellation. However, the subject is more specific since you will mention what contract is to be canceled. The subject can be about a lease, payment, employment, membership, or any other service. Clarify the subject so the recipient is sure of what specific contract to end.Salutation: Just like any detailed letter, you must start with a salutation. You can use ‘Dear Mr./Ms.’ followed by the name of the recipient. This part is necessary to formally address whom you are writing for. But, be careful with your pronouns too for sensitive concerns.Introductory Statement: Be sure to kick off the letter with your intention. Flowery words are unnecessary in the introductory statement so you can be more direct to the point. You can say that you are writing to cancel a contract. And you include the background details from when the contract was made, what specific products/services must be canceled, etc.Body: To explain the cancellation further, log it into the body of the letter. The body marks where you explain why you need to cancel the contract. The same goes for what rules are being violated or not, what possible payment will be part of the process, and more. Ensure that all important details will be written here.Closing Statement: End the letter with a closing statement. This statement is where you mention that you are expecting a response to the letter and you may insert other contact details for them to communicate with you. Also, thank the recipient for taking the time in reading the letter. And as much as possible, end the letter on a positive note.Name and Signature: Last but not least, affix your name and signature at the bottommost part of the letter. This part confirms that all information given was written truthfully and accurately. So only sign the document if you are confident that there are no errors in the letter.

How to Make a Contract Cancellation Letter

Now for the main course, get ready to write your own contract cancellation letter. From everything you discovered about the contract cancellation letter’s meaning, significance, and parts, you can finally apply your knowledge in making the letter itself. In fact, the process has never been made easier when you follow these few steps on how to create the contract cancellation letter:

Step 1: Review the Original Contract and Gather the Details

First of all, you need to look back at the original contract you are planning to cancel. That is where you can review all the terms and conditions, especially on the cancellation terms. Maybe your reason for canceling is part of the unacceptable reasons for cancellation. Or perhaps, you still have not covered enough time with the service contract since early cancellations could be rejected. Once you fully reviewed and understood the contract, then you will know how to tailor the contract cancellation letter afterward.

Step 2: Use a Sample Contract Cancellation Letter

Did you see the list of sample contract cancellation letters above this article? Take time to check them out individually until you can find the best template for you to work with in making the letter. Sample templates make the process even easier because you need not create a letter from the very beginning. Ready-made parts are already there and you only fill in the missing or finishing touches. You can even print, download, and edit each sample anytime—promising you a very streamlined experience.

Step 3: Set a Formal Letter Format

Contract cancellations letters must be in formal letter format. Just like business letters, the standard is to use a single space for the document and leave at least six to eight lines between the sender’s address and the recipient’s address. Next, leave a double space until you can insert your salutation. Another double space comes next until you write the introductory statement, body, and closing statement. Also, you can go for a readable font style and font size, especially the basic business fonts.

Step 4: Complete the Parts of the Letter

If you can still recall the parts of a contract cancellation letter earlier, then you should have the title down to the name and signature section in completing your letter. Otherwise, you might miss out on relevant parts that could make your message even weaker. You can also add more elements that you think are important and relevant for the recipient to know about. But the same as before, keep it brief or direct.

Step 5: Mind Your Content and Tone

Similar to the way you write any letter, you should write your message cordially. Be respectful in both content and tone of the letter. Recipients or businesses would refuse to accept the cancellation more when you are very rude with your words. This is a professional document in the first place. You can use words that are easily understood by the public as well, so the message you are trying to convey goes crystal clear. And you can prove how effective your message is by evaluating your output if it gives a positive or a negative tone.


What is the difference between a contract cancellation letter and a contract termination letter?

Although contract cancellation letters and contract termination letters are quite synonymous, they are also a bit different. Contract termination eventually cuts off an existing contract of parties in construction, sales, and other projects. On another note, contract cancellation is concerned more with services or memberships where service still exists but the service gets canceled on a specific party only.

Can you cancel a contract right after you just signed it?

It is already known that contracts and agreements are effective once signed. But if you recently signed it and want to back out already, you can cancel it if there is no rule given that you are given a certain period of time about when to cancel the deal. However, most contracts give at least two weeks or 30 days before you can end it.

Cancellation fees are certainly legal if the customer was informed about it and if it was written in the contract and the customer signed it. And clients should have a cancellation fee receipt to prove that they paid. What matters most is that the cancellation fee was introduced in the contract as it is illegal to just ask for it yet it was never mentioned or tackled in the original contract.

Now that you know how to create a proper contract cancellation letter, focus on when to actually write the letter itself. There are different conditions and regulations per contract in the first place. Maybe the contract you are under has a 30-day cancellation policy, meaning you can’t cancel yet unless it reaches 30 days. Some even have cancellation fees or would require you to make an early notice of cancellation. Once you are on the right timing to request for cancellation, everything will run smoothly by applying what you learned from this article and using premade sample contract cancellation letters. Create one now!