Unilateral termination and long-term agreements

Abstract

The Agreements that prolong over an extended period of time because they do not have a fixed term or because, once expired, the parties herein continue bounded can generate a debate regarding the grantors´ choices to either unilaterally terminate such agreement, or terminate it without cause. The power to cancel a contract under those circumstances is not illegal as the national legal system does not forbid it, but it should be used in a prudent way to prevent such contract from terminating in an untimely or unexpected manner, which may bring a serious damage to the other party. If long-term agreements are overused come to violate the bona fide principle and the obligation to remedy said damages becomes imperative.