How to Properly Terminate Contracts

1. Types of Termination

Termination usually needs to be done in writing. The best method is still sending it via registered mail with a signature. Alternatively, fax is also acceptable. In B2B contracts, the written form with a signature is the legally correct procedure.

Electronic Termination

Regarding terminations in electronic form in consumer contracts, Swiss law allows for interpretation. A termination via email or text message is generally considered written. However, the issue lies in proving it. Even if the sender still has it on their device and can show it, that often isn't sufficient proof of receipt. Therefore, it's best to check the contract for clauses regarding termination method.

Many providers already accept electronic terminations and offer user-friendly online forms. However, if the contract specifies written termination with a signature, an email or text message termination isn't sufficient. Usually, even a scanned signature isn't accepted. In case of doubt, you should inquire with the company.

Confirmation of Termination

The confirmation of termination is undoubtedly, alongside the termination itself, the most important document in the process. Whether it's sent via post or electronically, always keep a record of it. In the case of an email, it's recommended to download it.

In business contracts, once again, the written version is the correct one. If there isn't already a contractual clause, it's advisable to have the recipient acknowledge the receipt of termination with a signature.

2. Notice Periods

There are fixed-term and indefinite contracts, both subject to notice periods that must be adhered to. If the contract doesn't specify rules, follow the law. Legally, a termination only becomes binding upon actual receipt. This means it becomes valid when the recipient holds the termination or acknowledges receipt of the registered mail.

Automatic Contract Renewal

A frequently asked question is whether automatic contract renewals are legally permissible. Under certain conditions, the answer is yes. The basic requirement is an unambiguous and visible indication. If the notice is included within the terms and conditions, explicit reference to the terms and conditions must be made. If the indication isn't clear enough, the renewal can quickly become legally ineffective.

Early Termination

Contractually established notice periods are legally binding. However, if you have a valid reason for termination, review the contract clauses. Some contracts include valid exceptional situations, allowing you to exit the contract earlier with proper evidence. Within consumer contracts, these can include reasons such as relocation, illness, or unemployment. Another reason could be a changed contractual situation, where the service recipient is demonstrably placed in a significantly worse position. However, also consider data protection laws at this point. For instance, your contractual partner may only obtain information about your health status with your explicit consent.

If the service provider changes prices during the contract term, pay attention to the percentage of the increase. The law sometimes allows for early termination if a certain threshold is exceeded, often around 10% in the consumer sector. However, each case must be examined individually.

Revocation of Consumer Contracts

In Switzerland, consumers have the right to revoke certain contracts within a specified period. Unless otherwise agreed in the contract, the period is 14 days according to the Swiss Code of Obligations. It doesn't matter whether the contract was concluded in writing or by telephone. However, the revocation is subject to strict conditions.

The basic requirement is that it's a contract for private or family purposes, and the contract value exceeds CHF 100. The place of contract conclusion is also crucial. Contracts concluded online, in a store (excluding your own workplace), or at trade fairs are generally excluded. Additionally, it must involve a movable object or a service. Insurance contracts are also excluded. Furthermore, the customer must not be the initiator of the contract. In practice, this mainly concerns contracts that the customer spontaneously entered into after being offered one.

For leasing contracts, loans, or matchmaking contracts, the law describes a general right of withdrawal for the customer within the specified period.

Immediate Termination

An extraordinary termination is possible for both contracting parties if there are serious reasons. In the case of an employment contract, this could be, for example, a criminal offense, inadequate personal behavior, or bullying.

Blocking Periods

In some cases, there are blocking periods, especially in labor law. These occur, for instance, in cases of pregnancy, illness, or accidents. Certain contractual relationships such as civil or military service are even non-terminable during their performance.

Abusive Termination

An abusive termination is characterized by the fact that the recipient of the termination is discriminated against in a certain way, for example, based on their characteristics, religion, or age. Abusive terminations can be contested, often resulting in compensation payments.

Special Case: Service Contracts

Within the termination of service contracts, there's a peculiarity in Switzerland. The legislation includes within the termination right according to contract law (Article 404 CO) a mutually applicable right of withdrawal and termination at any time. It cannot be excluded by contract.

This legal clause is repeatedly criticized for the resulting mutual uncertainty. Even if there's a theoretically obvious breach of contract due to early termination, the court may decide in favor of the terminating contracting party, consider the termination valid, and waive the contractually stipulated penalty. There's currently no prospect of a change in the law. Therefore, when drafting contracts, pay particular attention to clauses regarding early termination.

3. Rights and Duties during and after the Notice Period

During the notice period, both contracting parties are obligated to continue their agreed tasks until the end of the contract and successfully complete any projects. Borrowed equipment must be returned undamaged and within the specified period.

Insurance and Co.

As a customer, you should look for new insurance before the coverage expires.

If you're an employer, find out in which cases you're required to deregister your employee from various offices after their termination. These include, for example, OASI/DI/APG (in german: AHV/IV/EO), Pension Fund (OP), Unemployment Insurance (ALV) or Loss of Earnings Insurance. In some cases, the employee has the option to continue insurance privately after termination. In that case, the employee or employer side must be informed. The employee must report to the RAV themselves – ideally still within the notice period.

Conclusion

We hope this article has provided you with some support. However, we're aware that contract law and associated laws are complicated and remain so. Specialized attorneys make life easier in these matters. They can advise on both private and business contract cases and represent you in court if necessary.

GetYourLawyer is happy to assist you in finding a suitable lawyer. Use our provided free online form and you'll quickly and easily receive quotes from specialized attorneys in your region.