By Khalid Massoudi – Masnad Legal Consultancy, Afghanistan
Termination of Contracts in the Afghanistan Law
One of the fundamental principles of the contract is, it’s obligatory nature, which means both parties are required to fulfill their obligations and commitments pursuant to the agreement, and none of them can ignore or deny the provisions of agreement unilaterally. However sometimes it happens, that one party breaches the provisions of the agreement pursuant to the law or agreement, which such disruption in legal terminology is called termination of the agreement.
The Afghanistan Commercial Contracts Law defines different circumstances of termination of contracts and implicitly terms of termination of the agreement which briefly stated as follow, as per above Law, commercial agreements can be terminated in following conditions:
- Contracts are normally terminated upon expiration of their terms unless renewed by the parties,
- When all commitments of the parties are performed following the provisions of the contract, the contract is terminated spontaneously, or when all commitments are not performed but the parties agreed on termination of agreement and performance of remaining commitments differently,
- Parties can unanimously, terminate the agreement at any time, whether the commitments are performed or not,
- Parties can include the right to terminate, in the agreement for any of the parties, in such condition the rightful party can terminate the agreement upon submission of termination notice to another party, and such right can’t limit the right of any of the parties for claiming of compensation due to breach of contract or any other act.
Termination of contract does not release any of the parties from the fulfillment of their mutual agreed commitments; hence the rights and commitments of agreement continue and are the basis for claims of compensation between the parties unless agreed otherwise in the contract.
All provisions of contract related to dispute resolution, financial settlement, dissolution and other substantive provisions which require being continued after termination of contracts, remains to enforce unless agreed otherwise.
There are some provisions which mostly are expressed implicitly in the agreements unless the parties explicitly waived them, such conditions are expressed as implicit conditions of termination of agreements in Afghanistan Commercial Agreements Law, which are as follow:
- If any of the parties doesn’t perform its commitment by due date and the default continues within reasonable period of time to be fixed, in such circumstance the other party can terminate the contract, and
- Whenever any of the parties explicitly expresses its intent for denial of the performance of its contractual commitments, the other party can terminate the contract.
At last, whenever a period of the right of termination is indicated by law or in the contract, it will elapse by the due date, unless agreed otherwise by the parties.
Masnad Legal Consultancy