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CONTRACTS

What is a termination clause and what should I check?

SHORT ANSWER

It defines how each party can exit the contract — for breach ("for cause") or sometimes freely with notice ("for convenience"). Check who can terminate, how much notice, and what you’re owed or owe on the way out.

The termination clause decides how trapped you are. "For cause" termination lets a party exit when the other materially breaches — usually after written notice and a cure period. "For convenience" termination lets a party exit for any reason with notice — powerful, and often granted one-sidedly to the stronger party. The details that bite: notice length, whether you keep or refund prepaid fees, early-termination penalties, what happens to your data or work product at exit, and which obligations survive (confidentiality, indemnity usually do). If they can leave freely and you can’t, or exit costs you everything prepaid, you’re signing an asymmetric deal — knowingly or not.

What to do, in order

  1. Identify both exit routes: for cause and for convenience.
  2. Check whether convenience termination is mutual or one-sided.
  3. Note notice periods and any cure period for breaches.
  4. Read the money consequences: refunds, penalties, unpaid fees.
  5. See what survives termination and what happens to your data.

Common questions

What is a cure period?

A window (often 15–30 days) to fix a breach after written notice before the other side can terminate for cause — protection against termination over fixable slip-ups.

What does "termination for convenience" mean?

Exiting for any reason (or none) with the stated notice — no breach required. Valuable if you have it; risky if only the other party does.

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