B2B agreements in the IT sector
Contracts are most often thought of in the context of their contents. However, it’s good to think about some kind of exit plan right away. It is worth taking care of how the contract can be terminated. Both parties usually find out about the defects of contract termination clauses too late, i.e. when they want to terminate such a contract. How to approach this topic so that, on the one hand, you can secure your interests well, but on the other hand, so that the contract is not too flexible.
This article is for you if you have concluded or plan to sign, for example, a contract of mandate, a contract for the provision of programming services, a contract for body leasing or a contract for the provision of maintenance services (SLA).
Solution by mutual agreement
Each contract may be terminated by mutual agreement of the parties. It is enough for both parties to sign the appropriate agreement. This solution can be used to end the contract “overnight” but also with a fixed date. Just remember that if you sign such a termination agreement with the consent of both parties, it will be harder to pursue any claims for the duration of the contract. It all depends on the content of the agreement itself.
Another way to end cooperation under a B2B contract is to give notice to the other party. Termination is a unilateral declaration of will. Typically, the contract provides for a provision that either party may terminate the contract with a given period of notice. In this case, the contract ceases to be valid upon the expiry of this period. Standard notice periods in B2B contracts in the IT industry range from one to three months. This is the most common way to end a contract used by the parties.
Termination with immediate effect by the ordering party/service provider
In addition to the standard possibility of terminating the contract with a certain period of time, B2B contracts often contain a catalog of situations in which the ordering party/recipient may terminate the contract with immediate effect, i.e. without observing the notice period. These are situations in which the other party has grossly violated the rules of cooperation set out in the contract.
Examples of such situations may be:
- violation of the rules related to the protection of personal data,
- breach of a confidentiality agreement,
- violation of the non-competition clause,
- violation of the ban on hiring employees,
- service delays.
Termination with immediate effect by the contractor/service provider
As in the case of the ordering party/service recipient, the contractor/service provider may have the right to terminate the contract immediately without observing the notice period. The most common reason indicated in a B2B contract is a delay in payment of remuneration. But such a reason may be the notorious lack of cooperation on the part of the ordering party/service recipient, which prevents or significantly hinders the provision of services.
What if there is no contract?
If no B2B contract for the provision of services has been concluded or the concluded contract does not contain the rules for terminating the contract, the provisions of the Civil Code from Art. 746. In the event of termination on the basis of the above-mentioned provision takes effect immediately.
§ 1. The mandator may terminate the mandate at any time. He should, however, reimburse the mandatary for any expenses which the latter has incurred in order to duly perform the mandate; in the case of a mandate against payment, he is obliged to pay the mandatary part of the remuneration corresponding to the actions taken by the mandatary to that date and, if the termination was without good cause, he should also remedy any damage.
§ 2. The mandatary may terminate the mandate at any time. However, if the mandate is against payment and the termination was without good cause, the mandatary is liable for any damage caused.
§ 3. The right to terminate a mandate for good cause cannot be waived in advance.
What contract cannot be terminated?
In the context of terminating B2B contracts, it is worth noting that some B2B contracts cannot be terminated. The rules that I described above apply to B2B contracts, which are contracts for the provision of services, i.e. contracts of mandate. However, this is not the only category of B2B contracts concluded in the software house – programmer relationship (although it is by far the most frequently used). A contract for specific work can also be a B2B contract. Such an agreement is, for example, an implementation agreement in which we clearly define what the contractor is to do. The subject matter of the contract is to provide a specific result. Such a contract cannot be terminated. The provisions of the Civil Code do not provide for such a possibility. You can only withdraw from such a contract. Termination and rescission have different legal effects. If you want to learn more about withdrawal, I invite you to the rest of the articles on the blog.