Sample Letter of Termination (Purchase and Sale Agreement)

business termination

In business, sometimes things don’t work out as we anticipate them to be. You might end up in a contract, but eventually, get dissatisfied with the manner in which the party is delivering or selling their products/services. When caught up in such cases, it’s always recommended that you quit further transactions in a more professional way. While some people may opt to cancel their purchase through the phone, it is always a good idea to send a purchase order cancellation letter.

Defining a termination letter to purchase agreement

Just as the name suggests, a termination letter to purchase agreement refers to an official document written by a consumer to the seller, notifying them that the sales contract has been canceled. Usually, the main purpose of a termination letter to purchase agreement is to bring both parties (the buyer and the seller) to an agreement to hold on a purchase. Other than that, the letter also states where the earnest money shall be deposited/refunded. When purchases are terminated using an official letter, it not only shows professionalism but also helps maintain better relationship down the line.

Tips for writing a good termination letter

  • As a golden rule of thumb, always write the termination letter using a polite and professional tone.
  • Makes sure you provide the reason for canceling the purchase agreement.
  • Indicate in the letter that you are following the stated agreement guidelines and regulations.
  • Make sure you mention the precise Date you would want the termination process to end.
  • Show gratitude for the counterparty for their service. Also, you can wish them well in their future transactions. Who knows, maybe you’ll need their services in the future.

Common reasons to write this letter

There are plenty of reasons as to why an individual may decide to terminate a purchase contract. These includes:

  • If the supplies fail to honor their commitment and don’t deliver products/services on the agreed date.
  • When a consumer decides that they can no longer afford the prices of goods/services offered.
  • If the supplier fails to deliver the right type of goods ordered, i.e., they might be of poor quality or substandard. 
  • If the business has decided to close down its operations after making some orders. It would be good for it to notify the supplier not to process the supplies in time.
  • If the buyer suspects any cases of fraud from the supplier.

Sample termination letter to purchase agreement


[Buyers name]

[Buyers contacts & address]


[Suppliers details]

[Suppliers address]

[Date on which the letter is written]

SUBJECT: Termination letter to purchase agreement

Dear Sir/Madam,

I hereby regretfully write this letter to officially notify you that I am canceling the purchase agreement referenced [input reference number], that was signed on [Date when the letter was signed]. The reason as to why I am canceling the agreement is due to _ [mention the reason for your cancellation].

Due to this reason, we need a full/partial reimbursement of the funds issued in the original agreement. I have attached all the necessary documents that will assist in the cancellation process. However, after this, we shall continue to make other purchases provided that you observe the delivery timeline. Also, I hope that you’ll observe the supply requirements of the latter. I hope for the fullest cooperation from you so that we achieve a seamless and efficient legal formality.

Yours sincerely

__ [Name of the sender]

_ [name of organization]

Sample letter (Word Format)

File Format
  • MS Word

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    As a business person, you will always get into contracts with different vendors, clients, and suppliers. While some of these contracts will involve verbal communications, some will require legal agreements between the two or more parties. Whichever the case, always keep in mind that some contracts won’t go well as expected and, therefore, will need a termination. However, when you have decided to terminate a contract, always ensure you do it formally through an official purchase agreement termination letter. This will not only sell your professionalism but will also help maintain a positive relationship even after the contract termination.

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