Contract Clause Guide

Termination Clauses: Your Exit Strategy

A termination clause defines how and when a contract can be ended by either party. Understanding these terms is crucial - they determine your ability to exit a bad situation and what happens when you do.

Example Clause

Either party may terminate this Agreement for convenience upon sixty (60) days' prior written notice. Company may terminate immediately for cause upon material breach by Contractor. Upon termination, Contractor shall return all Company property and deliver all work product completed to date, and Company shall pay Contractor for services rendered through the termination date.

What This Means

Either side can end the contract with 60 days notice for any reason. The company can also end it immediately if you breach the contract. When it ends, you must return everything and hand over your work, and they'll pay you for work done so far.

Common Risks to Watch For

1

One-sided termination rights (only one party can terminate for convenience)

2

Short or no notice periods for termination

3

Unclear definition of 'material breach' that triggers termination for cause

4

Forfeiture of unpaid fees upon termination

5

Ongoing obligations that survive termination indefinitely

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