THE END in nigh

A contract can end in different ways. When the obligation of a party is discharged (megszűnik a kötelezettség, pl. teljesítéssel, a másik fél általi elengedéssel stb.), the corresponding right of the other party is said to be extinguished (megszünteti, “kimeríti” a jogot), and the contract is said to be discharged (a szerződés megszűnik). Depending on the circumstances, various expressions can be used to describe these situations. In this lesson, we are going to focus on some confusing words all related to the end of contracts.

If one of the contracting parties encounters difficulties in preparing for the performance, is dissatisfied with the bargain, or is otherwise uncertain whether they will carry out the contract when it is due, the said party may give a notice (értesít; felmond) to the other party prior to the deadline of the contract.  Hence the expression ‘notice period‘ (felmondási idő). This expression can also refer to the situation when the employee or the employer intends to terminate the employment agreement and informs the other party about it.

It is possible that one of the contracting parties (Party A) decides not to perform the contract even though they have no valid justification for this. In such a case,  Party A repudiates the contract (megtagadja a szerződés teljesítését jogszerű ok nélkül)and the other party (Party B) may accept the repudiation (a szerződés teljesítésének megtagadása jogszerű ok nélkül) and has several options: (i) terminate the contract, or (ii) continue with the contract, i.e. to affirm it and (iii) seek damages.

It may happen that after the conclusion of the contract, the performance of the contract becomes impossible due to force majeure or some other reason. In this case, the contract is frustrated (a szerződés teljesítése lehetetlenné válik, lehetetlenül), and the frustration of the contract (a szerződés teljesítésének lehetetlenné válása, lehetetlenülése) results in the contract being discharged.

If Party A decides to rescind the contract, it means Party A unilaterally decides to end the contract and expects the restoration of both parties to the positions they occupied prior to the conclusion of the contract (eláll a szerződéstől). Rescission (elállás) always has retroactive effect.

Cancellation, on the other hand, is decided by both parties, they mutually agree to finish the contract with retroactive effect (szerződés felbontása).

Termination has three different meanings:

1) it can either refer to ending the contract with future effect, based on the mutual agreement of the parties; neither (none) of the parties is obliged to perform what remains to be performed under the contract (szerződés megszüntetése); or

2) to unilaterally finish the contract with future effect, which act can have serious legal consequences due to the possible disagreement between the parties (szerződés felmondása); or

3) to the mere fact that the contract ceases to exist, sometimes automatically (szerződés megszűnése).