What does 'By Agreement' mean in the context of ending a contract?

In the context of ending a contract, 'By Agreement' signifies that both parties involved in the contract have come to a mutual decision to terminate the contract. This means that the parties have willingly negotiated and consented to end their obligations as specified in the contract, usually documented in writing to prevent disputes and ensure clarity.

This mutual agreement is essential in contract law, as it allows both parties to walk away from their obligations without legal repercussions that might arise from a unilateral decision to terminate the contract. Such an agreement can be reached at any time during the contract's duration, provided that both parties are in alignment about the decision to end it.

In contrast, the other options do not accurately capture the essence of 'By Agreement.' A contract ending without any specific terms being met does not involve mutual consent and can lead to disputes. An ending based on one party's failure to act reflects a breach, not an agreement. Additionally, requiring a legal process to end a contract implies formalities that are not present when both parties simply agree to terminate their relationship.