Termination Notice Pack

ARKANSAS TERMINATION NOTICE PACK

OVERVIEW AND PURPOSE

This Termination Notice Pack provides Arkansas-specific templates for terminating commercial contracts and agreements governed by Arkansas law. The notices address the most common termination scenarios: breach/cause, convenience, anticipatory repudiation, demand for adequate assurance of performance, insolvency, and chronic service-level failure.

Important: Arkansas follows the Uniform Commercial Code (UCC) for transactions involving the sale of goods (Ark. Code Ann. Title 4, Subtitle 1). For service contracts, the Arkansas Supreme Court has extended certain UCC notice provisions, including the requirement of reasonable notice of breach, to services contracts as well. See Wiles v. Capitol Indemnity Corp., 280 F.3d 868 (8th Cir. 2002) (applying Arkansas law).

KEY ARKANSAS LEGAL PRINCIPLES

Termination vs. Cancellation (Ark. Code Ann. § 4-2-106)

Under Arkansas law, "termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. Upon termination, all executory obligations on both sides are discharged, but any right based on prior breach or performance survives.

"Cancellation" occurs when either party puts an end to the contract for breach by the other. The cancelling party retains any remedy for breach of the whole contract or any unperformed balance.

Reasonable Notice Requirement (Ark. Code Ann. § 4-2-309(3))

An agreement dispensing with notification is invalid if its operation would be unconscionable. A term specifying standards for notice must be construed as requiring notice that is "reasonable" under the circumstances.

Statute of Limitations (Ark. Code Ann. § 4-2-725)

An action for breach of a contract for sale must be commenced within four (4) years after the cause of action accrues. Parties may contractually reduce this period to not less than one year, but may not extend it.

Adequate Assurance and Anticipatory Repudiation

Under Ark. Code Ann. § 4-2-609, when reasonable grounds for insecurity arise regarding the other party's performance, the insecure party may demand in writing adequate assurance of due performance. If assurance is not provided within thirty (30) days, the failure constitutes a repudiation of the contract.

TEMPLATE A: TERMINATION FOR CAUSE (MATERIAL BREACH)

NOTICE OF MATERIAL BREACH AND INTENT TO TERMINATE

Date: [__/__/____]

VIA: [________________________________] (Certified Mail, Return Receipt Requested / Overnight Courier / Hand Delivery / Email per Agreement)

To:
[________________________________]
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]
[________________________________]

Re: Notice of Material Breach and Intent to Terminate — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

This Notice is delivered pursuant to Section [____] of the Agreement and applicable Arkansas law, including Ark. Code Ann. § 4-2-106 (defining cancellation for breach).

1. Identification of Material Breach

The undersigned hereby notifies you that the following material breach(es) of the Agreement have occurred:

Breach Description:
[________________________________]
[________________________________]
[________________________________]

Date(s) of Breach: [__/__/____]

Specific Contractual Provision(s) Violated: Section(s) [____] of the Agreement

Supporting Facts and Evidence:
[________________________________]
[________________________________]
[________________________________]

2. Opportunity to Cure

Pursuant to Section [____] of the Agreement, you are hereby provided [____] calendar days from the date of your receipt of this Notice to cure the above-described breach(es) to our reasonable satisfaction.

The cure period shall commence on the date of actual receipt of this Notice and expire at 11:59 p.m. Central Time on [__/__/____].

To effectuate a cure, you must:
☐ [________________________________]
☐ [________________________________]
☐ [________________________________]

3. Consequences of Failure to Cure

If the breach(es) described above are not fully cured within the cure period, the Agreement shall automatically terminate effective as of [__/__/____], or the expiration of the cure period, whichever is later.

Upon such termination, we reserve all rights and remedies available under the Agreement and applicable Arkansas law, including but not limited to:

• Recovery of direct damages (Ark. Code Ann. § 4-2-711 et seq.)
• Incidental and consequential damages to the extent not disclaimed
• Any liquidated damages specified in the Agreement
• Equitable relief as appropriate
• Recovery of attorneys' fees and costs if provided by the Agreement

4. Reservation of Rights

This Notice does not waive any other rights or remedies available under the Agreement or applicable law. The exercise of any right hereunder shall not preclude the exercise of any other right. All rights under this Notice are cumulative.

5. Request for Written Confirmation

Please provide written confirmation of receipt of this Notice and, if you intend to cure, a written plan describing the proposed cure within [____] business days of receipt.

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

TEMPLATE B: TERMINATION FOR CONVENIENCE

NOTICE OF TERMINATION FOR CONVENIENCE

Date: [__/__/____]

VIA: [________________________________]

To:
[________________________________]
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]
[________________________________]

Re: Termination for Convenience — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

Pursuant to Section [____] of the Agreement, which grants either party the right to terminate the Agreement for convenience upon [____] days' prior written notice, we hereby notify you of our election to terminate the Agreement for convenience.

1. Effective Date of Termination

This termination shall become effective on [__/__/____], which is at least [____] days from the date of this Notice, in compliance with the contractual notice period.

2. Wind-Down Obligations

During the period between the date of this Notice and the Effective Date of Termination, the parties shall:

☐ Continue to perform all obligations under the Agreement through the termination date
☐ Cooperate in good faith regarding the orderly wind-down of activities
☐ Return or destroy all Confidential Information of the other party, including trade secrets protected under the Arkansas Trade Secrets Act (Ark. Code Ann. § 4-75-601 et seq.)
☐ Provide reasonable transition assistance as specified in Section [____] of the Agreement
☐ Deliver all work product completed or in progress as of the termination date
☐ Submit final invoices within [____] days of the termination date

3. Payment Obligations

All fees and expenses accrued through the Effective Date of Termination remain due and payable in accordance with the Agreement's payment terms. Any prepaid fees for services not rendered after the termination date shall be refunded within [____] days.

4. Surviving Provisions

The following provisions of the Agreement shall survive termination: [________________________________] (e.g., Confidentiality, Indemnification, Limitation of Liability, Dispute Resolution, Governing Law).

5. No Admission

This termination for convenience is not an admission of breach, fault, or liability by either party.

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

TEMPLATE C: DEMAND FOR ADEQUATE ASSURANCE OF PERFORMANCE

DEMAND FOR ADEQUATE ASSURANCE OF DUE PERFORMANCE

Date: [__/__/____]

VIA: [________________________________] (Must be in writing per Ark. Code Ann. § 4-2-609)

To:
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]

Re: Demand for Adequate Assurance of Performance — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

Pursuant to Ark. Code Ann. § 4-2-609 and the common law right to demand adequate assurance when reasonable grounds for insecurity arise, we hereby demand adequate assurance of your due performance under the Agreement.

1. Grounds for Insecurity

Reasonable grounds for insecurity regarding your continued performance have arisen based on the following:

[________________________________]
[________________________________]
[________________________________]

2. Demand for Assurance

We demand that you provide adequate assurance of due performance within thirty (30) days of your receipt of this demand. Ark. Code Ann. § 4-2-609(4) provides that after receipt of a justified demand, failure to provide adequate assurance within a reasonable time not exceeding thirty days constitutes a repudiation of the contract.

Adequate assurance shall include, at minimum:

☐ [________________________________]
☐ [________________________________]
☐ [________________________________]

3. Suspension of Performance

As permitted by Ark. Code Ann. § 4-2-609(1), until we receive adequate assurance, we may, if commercially reasonable, suspend any performance for which we have not already received the agreed return.

4. Consequences of Failure to Provide Assurance

If you fail to provide adequate assurance within thirty (30) days, such failure shall constitute a repudiation of the Agreement under Ark. Code Ann. § 4-2-610, entitling us to:

• Await performance for a commercially reasonable time; or
• Resort to any remedy for breach, including cancellation of the Agreement; and
• In either case, suspend our own performance and recover damages

5. Reservation of Rights

This demand does not waive any existing rights, claims, or remedies arising from prior breaches or other defaults under the Agreement.

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

TEMPLATE D: NOTICE OF ANTICIPATORY REPUDIATION

NOTICE OF ANTICIPATORY REPUDIATION AND ELECTION OF REMEDIES

Date: [__/__/____]

VIA: [________________________________]

To:
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]

Re: Anticipatory Repudiation — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

We write to notify you that the following conduct constitutes an anticipatory repudiation of the Agreement under Ark. Code Ann. § 4-2-610:

1. Repudiatory Conduct

On or about [__/__/____], you [________________________________] (describe the unequivocal communication or conduct indicating the party will not or cannot perform).

This conduct constitutes a clear, unequivocal refusal or inability to perform your material obligations under Sections [____] of the Agreement.

2. Election of Remedies

Pursuant to Ark. Code Ann. § 4-2-610, we hereby elect to:

☐ Cancel the Agreement effective immediately and pursue all available remedies for breach, including damages under Ark. Code Ann. §§ 4-2-711 through 4-2-717 (buyer's remedies) or §§ 4-2-703 through 4-2-710 (seller's remedies), as applicable.

☐ Await your performance for a commercially reasonable time before pursuing remedies.

3. Right of Retraction

We note that under Ark. Code Ann. § 4-2-611, you may retract your repudiation at any time before your next performance is due, provided that:

• You clearly indicate your intent to perform;
• You provide any assurance justifiably demanded under Ark. Code Ann. § 4-2-609; and
• The aggrieved party has not, since the repudiation, cancelled or materially changed position or otherwise indicated that the repudiation is considered final.

4. Damages

We reserve the right to recover all damages resulting from your repudiation, including cover damages, market-price differentials, incidental damages, and consequential damages to the extent permitted by the Agreement and Arkansas law.

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

TEMPLATE E: TERMINATION FOR INSOLVENCY

NOTICE OF TERMINATION DUE TO INSOLVENCY

Date: [__/__/____]

VIA: [________________________________]

To:
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]

Re: Termination for Insolvency — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

We have become aware that the following insolvency event has occurred with respect to [________________________________] ("Counterparty"):

1. Insolvency Event

☐ Counterparty has filed a voluntary petition for relief under Title 11 of the United States Code (Bankruptcy Code) on [__/__/____]
☐ An involuntary petition under the Bankruptcy Code was filed against Counterparty on [__/__/____]
☐ Counterparty has made a general assignment for the benefit of creditors
☐ A receiver, trustee, or custodian has been appointed for Counterparty or a substantial part of its assets
☐ Counterparty has become insolvent within the meaning of Ark. Code Ann. § 4-1-201(b)(23) (liabilities exceed assets or inability to pay debts as they become due)
☐ Other: [________________________________]

2. Contractual Basis for Termination

Pursuant to Section [____] of the Agreement, the occurrence of an insolvency event constitutes grounds for immediate termination.

3. Effective Date

The Agreement is hereby terminated effective [__/__/____] / immediately upon your receipt of this Notice.

4. Bankruptcy Code Considerations

Important: If Counterparty has filed for or is subject to bankruptcy proceedings, this Notice is subject to the automatic stay provisions of 11 U.S.C. § 362 and the executory contract provisions of 11 U.S.C. § 365. Any enforcement actions will comply with applicable bankruptcy law, including any required relief from the automatic stay.

5. Post-Termination Obligations

☐ All Confidential Information must be returned or destroyed within [____] days
☐ All outstanding payment obligations remain due
☐ Transition and wind-down shall proceed as specified in the Agreement
☐ Data return or deletion obligations shall be fulfilled per the Agreement

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

TEMPLATE F: TERMINATION FOR CHRONIC SLA / PERFORMANCE FAILURE

NOTICE OF TERMINATION FOR CHRONIC SERVICE FAILURE

Date: [__/__/____]

VIA: [________________________________]

To:
[________________________________]
[________________________________]

From:
[________________________________]
[________________________________]

Re: Termination for Chronic Service Level Failure — [________________________________] dated [__/__/____] (the "Agreement")

Dear [________________________________]:

We write pursuant to Section [____] of the Agreement and/or the Service Level Agreement attached thereto as Exhibit [____] to terminate the Agreement due to chronic service level failures.

1. History of Service Failures

The following service level failures have occurred during the [____]-month period ending [__/__/____]:

2. Prior Notices and Remediation Attempts

We have previously notified you of these performance deficiencies on:

Despite these notices and your representations regarding remediation, the failures have continued/worsened.

3. Termination

Under Section [____] of the Agreement, chronic failure (defined as [____] or more SLA failures within any [____]-month period) entitles us to terminate. We hereby terminate the Agreement effective [__/__/____].

4. Transition Assistance

Pursuant to Section [____] of the Agreement, you are obligated to provide transition assistance for a period of [____] days following the effective date of termination, including:

☐ Data export in commercially standard format(s)
☐ Continued access to the system during the transition period
☐ Cooperation with replacement vendor onboarding
☐ Knowledge transfer documentation
☐ Return or deletion of our data upon completion of transition

5. Refund and Credit Claims

We claim the following amounts due upon termination:

☐ Prorated refund of prepaid fees: $[________________________________]
☐ Accumulated SLA credits not yet applied: $[________________________________]
☐ Damages for service failures: $[________________________________]

Sincerely,

[________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

DELIVERY AND PROOF OF NOTICE — ARKANSAS REQUIREMENTS

Contractual Notice Provisions

☐ Review the Agreement's notice clause (typically found in the "Notices" or "General Provisions" section) for required delivery methods, addresses, and effectiveness standards

Recommended Delivery Methods

Arkansas-Specific Considerations

• The Agreement's notice clause controls the required method; absent a contractual requirement, certified mail with return receipt is the safest method
• Under Ark. Code Ann. § 4-2-309(3), notification must be "reasonable" under the circumstances
• Electronic delivery may be effective under the Arkansas Uniform Electronic Transactions Act (Ark. Code Ann. § 25-32-101 et seq.) if the parties have agreed to conduct transactions electronically

GOVERNING LAW AND DISPUTE RESOLUTION

Governing Law

All notices in this pack and the underlying Agreement are governed by the laws of the State of Arkansas, without regard to its conflict-of-laws principles. For transactions involving goods, the Arkansas Uniform Commercial Code (Ark. Code Ann. Title 4, Subtitle 1) applies.

Venue and Jurisdiction

The parties submit to the exclusive jurisdiction and venue of the state and federal courts located in [________________________________] County, Arkansas. (Common selections: Pulaski County (Little Rock), Washington County (Fayetteville), Benton County (Bentonville), Sebastian County (Fort Smith)).

Each party waives any objection to venue or any objection based on the doctrine of forum non conveniens.

Jury Trial Waiver

TO THE FULLEST EXTENT PERMITTED BY ARKANSAS LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THESE TERMINATION NOTICES OR THE UNDERLYING AGREEMENT. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THE AGREEMENT.

ELECTRONIC SIGNATURES AND DELIVERY

These termination notices and any related documents may be executed and delivered by electronic signature in accordance with:

• Arkansas Uniform Electronic Transactions Act (Ark. Code Ann. § 25-32-101 et seq.)
• Federal E-SIGN Act (15 U.S.C. §§ 7001-7006)

Electronic signatures shall be deemed original signatures for all purposes and shall be binding and enforceable. Electronic delivery shall be effective if the Agreement permits electronic notice.

PRACTICE TIPS FOR ARKANSAS PRACTITIONERS

Before Sending a Termination Notice

☐ Review the Agreement's termination provisions thoroughly — confirm that the grounds for termination are contractually or legally supported
☐ Confirm the notice clause requirements: method, address, attention line, copy recipients
☐ Verify that the cure period (if any) is correctly calculated and complies with the Agreement
☐ Document the breach or triggering event with specificity (dates, amounts, communications)
☐ Consider whether the breach is truly "material" — Arkansas courts apply the Restatement (Second) of Contracts factors to assess materiality
☐ Assess whether any prior waivers or course of dealing may have impaired the right to terminate
☐ Evaluate whether a demand for adequate assurance (Template C) is more appropriate than immediate termination

Materiality of Breach Under Arkansas Law

Arkansas courts consider the following factors when determining whether a breach is material:

☐ The extent to which the injured party will be deprived of the benefit reasonably expected
☐ The extent to which the injured party can be adequately compensated for the deprived benefit
☐ The extent to which the breaching party will suffer forfeiture
☐ The likelihood that the breaching party will cure the failure
☐ The extent to which the breaching party's behavior comports with standards of good faith and fair dealing

Statute of Limitations Reminders

• Sale of goods contracts: Four (4) years from accrual (Ark. Code Ann. § 4-2-725)
• Written contracts (non-goods): Five (5) years (Ark. Code Ann. § 16-56-111)
• Oral contracts: Three (3) years (Ark. Code Ann. § 16-56-105)

Common Pitfalls

☐ Failing to send notice by the method specified in the Agreement
☐ Providing an inadequate cure period
☐ Continuing to accept performance after sending a breach notice (potential waiver)
☐ Not preserving all copies of notices and delivery confirmations
☐ Overlooking surviving obligations post-termination (confidentiality, indemnification)
☐ Ignoring the automatic stay in bankruptcy situations (Template E)

SOURCES AND REFERENCES

• Ark. Code Ann. Title 4 — Business and Commercial Law
• Ark. Code Ann. § 4-2-106 — Definitions: Termination and Cancellation
• Ark. Code Ann. § 4-2-725 — Statute of Limitations
• UCC § 2-609 — Right to Adequate Assurance of Performance
• UCC § 2-610 — Anticipatory Repudiation
• UCC § 2-611 — Retraction of Anticipatory Repudiation
• Arkansas Supreme Court Extends UCC Notice Provisions to Services Contracts