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Contracts & Pricing

Termination Clause

A termination clause sets out the circumstances and process by which a contract can be ended before it would otherwise expire.

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Termination clauses typically distinguish termination for cause — where a party has breached the contract or become insolvent — from termination for convenience, which lets a party exit on notice without fault. Each route carries its own notice periods, procedures and consequences, such as settling for work already done or returning assets and data.

A well-drafted termination clause protects the buyer's ability to leave a failing relationship without being trapped, while giving the supplier fair warning and a clean handover. It should also address exit management: transition assistance, final invoicing and the return or deletion of information, so ending the contract does not disrupt operations or create loose ends.

Key points

  • Distinguishes termination for cause from termination for convenience.
  • Defines notice periods, procedures and post-exit obligations.
  • Good clauses include exit management and orderly handover.

Frequently asked questions

What is a termination clause?
A termination clause sets out the circumstances and process for ending a contract before its natural expiry, covering both termination for cause and termination for convenience.
What is the difference between termination for cause and for convenience?
Termination for cause follows a breach or insolvency, while termination for convenience lets a party exit on notice without fault, usually with different notice periods and consequences.

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