What Does “Termination for Cause” Mean in a Contract?
The right to end a contract due to a specific reason, typically breach or failure to perform.
Detailed Explanation
Termination for cause requires a legitimate reason - usually material breach, failure to perform, or specified events like bankruptcy. Unlike convenience termination, you must have grounds and may need to provide notice and cure opportunity.
For cause termination often carries different consequences than convenience termination - it may allow the non-breaching party to seek damages or avoid certain obligations.
Example in a Contract
“Company may terminate this Agreement immediately for cause if: (a) Contractor materially breaches and fails to cure within 15 days of notice; (b) Contractor becomes insolvent; or (c) Contractor is convicted of any crime involving dishonesty.”
Why It Matters
Termination for cause protects you when the other party fails to perform. Know what triggers cause termination rights, what notice is required, and whether a cure period applies.
Related Terms
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