Dissolvence, termination and withdrawal are very often used interchangeably to describe the manner in which a contract is terminated. Such a simplification can bring unfavorable consequences, since these three institutions are characterized by completely different nature and effect.
The principle of freedom of contract
The basic issues related to contracts are defined by the Civil Code. There we find the guiding principle that has the greatest influence on the creation of contractual relations, namely the principle of freedom of contract. Thanks to it, the parties can arrange the powers and obligations binding on them in any way they wish. However, the creation of a contract at will has a limitation – the content or purpose of the contractual relationship must not be contrary to its nature, applicable law or principles of social intercourse.
Simplifying, we can say that the content and purpose of the contract must be in accordance with the law, the sense of equity and justice, while the other issues are already at the discretion of the parties. This is also the case with determining when and how the contract binding the parties will end.
Termination of a contract by mutual agreement
One of the more popular methods of ending a contract is its termination by mutual consent. This form of termination of the contractual relationship can occur at any time, as long as both parties agree to this course of action, and can apply to basically any contract (even one that is not subject to termination under the Civil Code, such as a contract for work). The agreement can indicate when the contract would cease to be effective (whether at the time of the agreement or at a later date – both possibilities are permissible). It is also possible to indicate what, if any, settlements for the termination of the agreement the parties envisage between themselves (if they envisage them at all).
Termination of the contract
Most contracts (even those concluded for a fixed term) usually provide for termination by one of the parties. Unlike a termination agreement, termination is unilateral and does not require the consent of the other party. It is sufficient that only one party wants to terminate the contract, and such a possibility is provided for in the contract or is provided for in provisions such as the Civil Code.
In addition, contracts often specify a notice period, i.e. the time that must elapse from the moment a party terminates the contract (i.e. most often the handing or delivery of a letter of termination) until the termination of the contract. Note that during the notice period the contract is still in effect. This is the transitional time between informing the other party of the desire to terminate the contractual relationship and the actual termination.
When constructing a contract, it is worthwhile to provide for the possibility of termination in the contract, as well as to set a notice period in it (in principle, this can also be done with fixed-term contracts). However, in most cases, the absence of such provisions will not at all mean that the contract cannot be terminated. Most often, the provisions of the Civil Code, which provides for a number of “basic” rules of termination, will then apply.
Withdrawal from the contract
The right to withdraw from the contract can be reserved in the contract. As in the case of termination, a statement by one party to withdraw from the contract is sufficient. However, here the similarities end, because withdrawal has a completely different purpose and nature than termination.
Termination terminates the contract with effect for the future. This means that everything that has been fulfilled or paid under the contract up to the moment of termination is effective, binding and unchangeable.
In contrast, withdrawal from the contract produces effects as if the contract had never been concluded (that is, it is a kind of “termination” with retroactive effect, from the moment the contract was concluded). This, of course, has its consequences – usually the parties will have to return to each other what they received under the contract. Therefore, the right to withdraw from the contract is usually granted under the circumstances of quite serious misconduct or violations in the performance of the contract or the occurrence of significant external events (such as a significant delay in the start of the contract).
The Civil Code provides for the possibility of withdrawal from certain contracts in certain cases (e.g., the possibility of withdrawal from a contract for work by the ordering party in the event of a significant increase in the cost price). On the other hand, it is also possible to independently introduce such a right into any other contract. In such a case, it is necessary to specify precisely which party can withdraw from the contract, within what period of time, possibly also what can be the reason for withdrawal from the contract (most often it will be the failure of the other party to perform some obligation within a certain period of time).
Dissolve the contract, terminate the contract or withdraw?
At any stage, you can attempt to terminate the contract by communicating with the other party. In this case, there is discretion to determine when the contract will end.
Termination, on the other hand, is independent of the other party’s agreement. Instead, it usually involves the expiry of a notice period, i.e. the contract will continue for a certain period of time despite the notice of termination.
Withdrawal from the contract, on the other hand, is possible in cases prescribed by law or the contract. The period within which withdrawal can be made is always fixed in advance. This is an exceptional way of terminating a contract, as withdrawal makes the contract – colloquially speaking – ‘disappear’. Unlike termination by agreement and termination by notice, which only affect the termination date itself, withdrawal causes the contract to be deemed never to have been concluded.
W praktyce często zdarza się, że określenie „umowa o dzieło” używane jest zamiennie ze „zleceniem”. Choć granica pomiędzy nimi bywa niewyraźna, to jednak każda z tych umów ma służyć innemu celowi i z uwagi na to posiada odrębne cechy.
