What must happen if a contract is terminated by mutual agreement?

When a contract is terminated by mutual agreement, it signifies that all parties involved have come to a consensus to end the contractual obligations. This action means that the terms of the contract are no longer in effect, and thus, an official cancellation is necessary to document this mutual decision.

The official cancellation provides a clear record that all parties agreed to terminate the contract, which helps prevent any potential disputes or misunderstandings in the future about the status of the agreement. Documenting the cancellation can serve as proof that neither party can enforce any remaining obligations or claims against one another related to the original contract.

Other options might suggest actions that are not inherently required by the termination of the contract. For instance, no advertising does not directly relate to the cancellation itself, and the signing of a new agreement or rescheduling of an auction is not a necessary action when both parties decide to end their current contract. Thus, understanding the importance of officially canceling the contract helps ensure clarity and mutual understanding among all parties involved.