Guide to No Renewal Contract Letter
A no renewal contract letter is a document that notifies your contract counterpart that you do not intend to renew them as your service provider, contractor, or employee when your current contract comes to an end. In the case of a no renewal contract letter for an employee, this could be because of performance, behavioral, or other issues that you have with the employee . The no renewal contract letter is used as a professional method to turn down a higher level of services or work than you currently wish to pay for. Instead of allowing the renewal contract to automatically continue on for another term, the no renewal contract letter allows you to decline.
Essential Elements of a No Renewal Contract Letter
There are a number of different variations of a no renewal contract letter. In general, a no renewal contract letter should include the details required for a contract termination, including but not limited to:
- The name and address of the individual who the letter is being sent to;
- A clear statement that the contract will not be renewed and the effective date for this not renewal to take effect;
- Clear reference to the provision in the contract that details the conditions for termination of the contract;
- An accurate description of the contact for whom this contract applies to; and
- Any and all additional information needed to supplement what is stated in the contract.
In the vast majority of the contracts, regardless of whether they are employment contracts, contracts for services, loan agreements or any other form of contract, a clear clause stating that the contract may be terminated by either party when required will allow the parties to a contract to automatically terminate the given contract by providing advance notice to the other party that the contract will not be renewed when it expires, without the member presenting any further reason for terminating the contract.
Legal Implications and Best Practices
When preparing a no renewal contract letter, it is imperative to keep the following legal considerations in mind: The circumstances and timing of the issuance of a no renewal contract letter must be considered and may depend on the terms of an applicable contract. Issue the no renewal contract letter as soon as practicable before a contract ends but do not issue the no renewal contract letter before it is necessary or appropriate to do so. Always honor contractual obligations. Do not issue a letter to prospective clients until a contract for services is entered into with the applicant. Specific legal requirements may apply depending on the nature of the work and the terms of the contract. Be clear on the issue date and the date of service termination. Honoring contractual obligations, issuing the no renewal contract letter as soon as practicable before the contract ends, and ensuring the no renewal contract letter is clear and concise will mitigate the potential for legal risks.
How to Write an Effective No Renewal Letter
When crafting a no renewal letter, whether you are a landlord or a property management firm, have the following tips in mind.
Maintain a Professional Tone and Language
It doesn’t matter what the situation is or how well you know the tenants, make sure you maintain a professional tone and local vocabulary. Even if you have a bad situation with a tenant, consider hiring an attorney to compose your no renewal letter for you. If you insist on composing the letter yourself, avoid using slang both in the letter and in conversations about the letter. Don’t use words that may not be immediately understood to someone outside of your industry. For example, use the term "vacation" instead of "holiday" and "pants" instead of "trousers."
Give Plenty of Notice
Depending on the terms of the lease, you may be required to give up to 60 days’ notice before the lease expires. Couch the termination language in terms of "not renewing" the lease, rather than the more harsh "terminating" the lease. If a tenant approaches you to renew the lease after you’ve sent the no renewal letter, do not change your mind and decide to renew the lease after all. It’s important to send this message to the tenant and should be written in the no renewal letter. Again , clearly stating that the reason you do not renew the lease is because you have decided to go in a different direction will set expectations properly. There may be a really good reason for deciding to go in a different direction. For instance, buyers looking for a long term rental think nothing of waiting several months to take possession. There are many good reasons for giving the notice. Be professional and polite so that you don’t burn that bridge but stick to your guns on the direction you want to take.
Personalize the Letter
It should go without saying that you would want to personalize and customize your no renewal letter. No one wants to receive an impersonal no renewal letter with no personalization, no particular attention paid to the relationship you built with the tenant. It’s not critical to mention specifics about the relationship, such as the names of each tenant but it’s important to greet the tenants by name and reference the location they are renting, especially if you have dozens of units. Without personalizations, you leave the tenant wondering if the letter was really for them or if this is a mass mailer.
Example of a No Renewal Contract Letter
The following is an example of a no renewal contract letter, in which all the recommended components are incorporated throughout the letter.
DATE
CLIENT NAME
ADDRESS
ADDRESS
CITY, STATE ZIP
RE: NO RENEWAL LETTER – CLINICIAN NAME
Dear CLIENT NAME,
On behalf of Clinic, LLC d/b/a Clinic my telehealth clinic ("Clinic"), I am writing to advise you that Clinic, LLC d/b/a Clinic will not be renewing your agreement with Clinic ("Service Agreement") when such Service Agreement expires on DATE.
As you may know, Clinic is unable to enter into new service agreements with clients in the State of STATE. As a result, we regret to inform you that the Clinic will be closing in the State of STATE to new clients, effective immediately.
Please be assured that this change will have no effect on your existing treatment or relationship with your clinician, Clinician NAME and Clinic.
Clinician NAME has and continues to work with you as we close out your treatment relationship with Clinic.
Please also understand that Clinic will continue to work with you to ensure that your medical records are appropriately transferred in accordance with applicable state law and your personal desires. After new arrangements have been made, Clinic will also work with you to permanently close your account with Clinic.
Should you have questions about how this will impact your care, please reach out to Clinician NAME directly.
I want to take this opportunity to thank you for allowing Clinic to be part of your mental health and wellness care. We wish you all the best in the future.
What Not to Do
There are a number of mistakes that are often made when crafting a no renewal contract letter. Here are a few of the most common, and how to avoid them.
Mistake #1: Unilateral contract termination without a written agreement
Too many times an employer believes they can skip the formality of a no renewal contract letter and simply agree with the contractor verbally that they will not be remaining a contractor or be re-hired in the event their contract expires. This is not a good idea. For both the employer and the contractor, this could lead to either side being in a difficult contractual situation (i.e. the contractor feels they’ve been misled and recruits the employer’s competitors, or the employer cannot find any other contractors willing to negotiate due to the bad reputation given by the old contractor). The code is intended to be clear on this matter: it must be in writing .
Mistake #2: Lying in a no renewal contract letter
When the employer gets a contract employee to sign a No Renewal contract letter and then tells them it’s for the purpose of keeping an accurate account of personnel, this may amount to fraud. The employer should always act in good faith, even when seeking the benefit of the contract. The contract should accurately reflect what is intended.
Mistake #3: Breaching the Psychologic Contract
Just as a contractor shouldn’t mislead the employer, neither should an employer mislead the employee. A contractor can be told their contract will be renewed or will not be renewed when the opposite is actually true. The employer may mistake the contractor’s silence as an acceptance of their intentions, and therefore does not feel a strong need to issue a significantly detailed no renewal contract letter. Bad choice. This will create bad blood in your relationship with the contractor, and it could persuade a court to accede to the contractor’s demands in the event of a breach of contract by the employer.