ContractsCounsel Logo

Termination Clause

Get free proposals from vetted lawyers in our marketplace.

No upfront payment required. Pay only if you hire.
Home Contract Clauses Termination Clause

Jump to Section

Termination Clause Defined

Termination clauses, also called severance clauses, authorize parties to terminate an agreement without breaching the contract under early termination and mutual termination. Parties can avoid a dispute by allowing a termination clause to trigger for a previously agreed upon reason.

Types of termination clauses include:

  • Type 1. Termination for convenience
  • Type 2. Termination for cause

Incorrect use of the termination clause can also result in a legal conflict. General contract principles still apply regardless of the terms and conditions.

Here’s an article about termination clauses for more information.

Termination Clause Explained

Termination clauses set the terms and conditions surrounding a contract cancellation that doesn’t result in penalties. These rules typically address who may cancel the contract and for what reasons.

Negotiate these terms carefully with an attorney to ensure that they are enforceable and fair.

Purpose of Termination Clause

The purpose of termination clauses is to remove issues surrounding breach of contract claims and termination. Not all contract breaches are created equally, and termination clauses provide guidance.

Termination Clause Examples

Examples of termination clauses include:

  • Example 1. Negotiating severance pay for the supposed termination of employees
  • Example 2. Performing M&A due diligence when considering a new venture
  • Example 3: Counterparties buying and selling an asset with limitations

Many projects can benefit from a termination clause. However, get legal advice from attorneys to prevent mistakes that can affect your future.

Termination Clause Samples

Sample 1 – Softare and Service Agreement

Termination. Either party may terminate this Agreement prior to the beginning of the Renewal Term by providing one hundred twenty (120) days written notice to the other party prior to the end of the then-current term. If notice of termination is provided by Client but TRAVELTRAX services provided by TRX extend past the termination date of the then-current term, then pricing for such TRAVELTRAX services shall be, at Client’s option, either (a) a *; or (b) a *. In the event; that Client exercises its option for a * renewal, the TRAVELTRAX services shall not be extended past December 31, 2012. If Client does not notify

TRX in writing of its choice of option (a) or (b) by December 1, 2011, then Client shall be deemed to have chosen option (b). Either party may terminate this Agreement and the rights granted herein if the other party materially breaches any of the provisions of this Agreement and fails to remedy such breach within thirty (30) days after receiving written notice thereof, provided the breach does not relate to a monetary obligation (in which case TRX may exercise its rights under Section 6(a)) or breach of confidentiality (in which case the non-breaching party may exercise its rights under Section 7(f)). Termination of this Agreement does not constitute either party’s exclusive remedy for breach or non-performance by the other party and, subject to the other provisions of this Agreement, each party is entitled to seek all other available remedies, both legal and equitable, including injunctive relief.

  1. Insolvency. Should either party (i) admit in writing its inability to pay its debts generally as they become due; (ii) make a general assignment for the benefit of creditors; (iii) institute proceedings to be adjudicated a voluntary bankruptcy; (iv) consent to the filing of a petition of bankruptcy against it; (v) be adjudicated by a court of competent jurisdiction as being bankrupt or insolvent; (vi) seek reorganization under any bankruptcy act; (vii) consent to the filing of a petition seeking such reorganization; or (viii) have a decree entered against it by a court of competent jurisdiction appointing a receiver, liquidator, trustee, or assignee in bankruptcy or in insolvency covering all or substantially all of such party’s property or providing for the liquidation of such party’s property or business affairs; then, in any such event, the other party, at its option and without prior notice, may terminate this Agreement effective immediately.
  2. Effect of Termination. Upon termination of this Agreement for any reason other than the insolvency of TRX or TRX ceasing to conduct business in the ordinary course and its obligations hereunder are not assumed by a third party: (1) all rights and licenses granted to Client hereunder shall immediately cease; (2) TRX shall terminate Client’s access to the Services; (3) Client shall immediately cease use of the Services (including all Software) in any manner whatsoever, and delete and return all copies of Software, Documentation and other related materials to TRX; and (4) all payments owed to either party shall be immediately due and payable. Should TRX become insolvent and cease to conduct business in the ordinary course without its obligations hereunder being assumed by a third party, *.
  3. Survival. Where the context or wording of a section indicates, the terms of this Agreement shall survive its termination, including, without limitation, Sections 5(c), 5(d), 6(a), 7, 8, 9, 10, 11,and 12 hereof.


Security Exchange Commission - Edgar Database, EX-10.4 5 dex104.htm SOFTWARE AND SERVICE AGREEMENT, Viewed May 10, 2021, < >.

Sample 2 – Service Agreement

TERMINATION. This Agreement may be terminated at any time by the written agreement of the Parties as provided in Section 1 hereof. Notwithstanding the foregoing and any other provision contained herein, the following Sections of this Agreement shall remain in effect and shall survive the termination of this Agreement: Section 5, Billing; Section 6, Limitation on Liability; Indemnification; Section 9, Confidential and Proprietary Information; Section 10, Cooperation and Dispute Resolution; Section 13, Successors and Assigns; and Section 14, No Third Party Beneficiaries.


Security Exchange Commission - Edgar Database, EX-10.36 2 d395429dex1036.htm SERVICE AGREEMENT, Viewed May 10, 2021, < >.

Sample 3 – Service Agreement

Term; Termination

4.1 Term. This Agreement shall commence on the Effective Date and shall continue for a period of one (l) year from the Effective Date (the “Initial Term”), unless earlier terminated pursuant to Sections 4.2, 4.3, 4.4, or 4.5 or extended as provided in this Section 4.1. Following the Initial Term, this Agreement shall automatically renew for subsequent one (l) year periods (each, a “Renewal Term”), unless earlier terminated pursuant to Sections 4.2, 4.3, 4.4 or 4.5 or unless Tenet provides written notice to IMaCS at least one hundred eighty (180) days prior to the expiration of the Initial Term or then current Renewal Term.

4.2 Termination for Cause. If either Party materially defaults (including but not limited to the willful, material and wrongful disclosure of Confidential Information) in the performance of any of its duties or obligations under this Agreement (except for a default in payments by Tenet) which default is not substantially cured within thirty (30) days after written notice is given to the defaulting Party specifying the default, or, with respect to those defaults which cannot reasonably be cured within thirty (30) days, if the defaulting Party fails to proceed within thirty (30) days to commence curing said default and to proceed with all due diligence substantially to cure the default, but in any event does not substantially cure the default within ninety (90) days, then the Party not in default may, by giving written notice of termination to the defaulting Party, terminate this Agreement as of a date specified in the notice of termination (the “Termination Date”) such Termination Date being subsequent to the date of the notice of termination.

4.3 Termination for Nonpayment. If Tenet defaults in the payment when due of any amount due to IMaCS and does not, within thirty (30) days after being given written notice, either: (a) cure such default; or, (b) indicate that the payment is in dispute and provide a detailed explanation of such dispute and deposit the disputed amount in escrow in a major U.S. commercial bank reasonably designated by IMaCS, with interest to be allocated to the Party entitled to the principal upon resolution of the dispute, then IMaCS may terminate this Agreement. In the event Tenet deposits any disputed amount in escrow, such amount, together with any accrued interest, shall be released by the escrow agent only upon (a) receipt of written instructions signed by both IMaCS and Tenet or (b) receipt of an order from an arbitrator or court of competent jurisdiction.

4.4 Termination for Convenience. Tenet may terminate this Agreement in its entirety on or after the first anniversary of the Effective Date upon at least one hundred eighty (180) days’ prior written notice to IMaCS.

4.5 Termination of MLSA. Tenet may terminate this Agreement upon the termination by either party of the MLSA or expiration of the MLSA.

4.6 Obligations Upon and After Termination. Notwithstanding anything in the Agreement to the contrary, whenever the Agreement is terminated or expires, in addition to any rights or remedies of the Parties under the Agreement, Tenet or its designee shall have the right to obtain the services provided for under this Agreement from a third party. IMaCS agrees to cooperate with any third party so as to accomplish the transaction without an interruption or disruption of the business operations of any Clients. Upon termination or expiration of this Agreement, for a period of one (l) year following such termination or expiration, Tenet shall have the right, but not the obligation and IMaCS shall fully cooperate with Tenet and/or its designee, if any, to facilitate the transfer of the IMaCS System, operations, Hardware, Documentation, licenses for use of all related materials pertaining to the operation of the Data Center to Tenet or its designee for a fee computed as follows: the greater of either (i) 25% of IMaCS’s actual initial purchase costs or prepaid license fees or (ii) the purchase costs or prepaid license fees, less straight line depreciation over sixty (60) months following the date of purchase license by IMaCS. Notwithstanding anything contained in the Agreement to the contrary, Tenet shall pay no additional fees to IMaCS under this Section 4.6 for any software provided pursuant to the Master Software License and Service Agreement. IMaCS shall provide the services at its then-prevailing commercial rates. IMaCS shall provide other transition services as requested by Tenet as Additional Services under the terms of this Agreement for a period of sixty (60) days following the transfer of the IMaCS System to Tenet, or its designee, at IMaCS’s then prevailing commercial rates.


Security Exchange Commission - Edgar Database, EX-10.17 10 dex1017.htm SERVICES AGREEMENT, Viewed May 10, 2021, < >.

Sample 4 – Service Agreement


18.1 Termination of Agreement

(a) For Cause by WSI. If IBM (i) materially breaches this Agreement, and (1) does not cure such breach within thirty (30) days of receipt of a notice of default or (2) with respect to a breach that cannot with due diligence be cured within thirty (30) days of notice thereof, IBM fails to proceed promptly and diligently to correct the breach and develop within thirty (30) days of notice of breach a complete plan for curing the breach acceptable to WSI, (ii) commits numerous breaches of its duties or obligations which in the aggregate constitute a material breach and continues to commit breaches of this Agreement during the sixty (60) days after IBM’s receipt of notice from WSI that IBM is in jeopardy of WSI terminating under this Section, then WSI may, by giving notice to IBM, terminate this Agreement, in whole or in part, as of the termination date specified in the notice.

(b) For Failure to Meet Service Levels. WSI may, by giving notice to IBM within 90 days of such event, as its sole remedy terminate the agreement in the event of a Service Level Termination Event as set forth in Schedule B without payment of the Termination Fee, and WSI will pay IBM’s actual Wind-Down costs.

(c) For Cause by IBM. If WSI (i) materially breaches this Agreement and (a) does not cure such breach within thirty (30) days of receipt of a notice of default or (b) with respect to a breach that cannot with due diligence be cured within thirty (30) days of notice thereof, WSI fails to proceed promptly and diligently to correct the breach and develop within thirty (30) days of notice of breach a complete plan for curing the breach acceptable to IBM, then IBM may, by giving notice to WSI, terminate this Agreement in whole or in part, as of the termination date specified in the notice.

18.2 For Convenience by WSI. Subject to the time restrictions and other terms and conditions set forth in Schedule C, Part 1, Part 8.0(b), WSI may terminate this Agreement in whole (or in part only as set forth herein) for convenience by giving IBM 90 days prior written notice. WSI may terminate the Service Categories for convenience as described in and according to the terms set forth in Schedule C, Part I, Section 8.0.

18.3 Calculation of Termination Charge. Set forth in Schedule C are the termination charges that would be payable to IBM if WSI terminates this Agreement pursuant to Section 18.2.

18.4 Partial Termination: Termination Charge Adjustment. If WSI terminates a portion of the Services pursuant to Section 18.2, the Termination Charge applicable to the remaining Services as a whole shall be adjusted in accordance with Schedule C.

18.5 Termination Charge. Except as otherwise specifically set forth in this Article, no termination fee shall be payable by WSI in connection with the expiration or a termination for cause of this Agreement.

18.6 Effect of Termination. In the event WSI terminates this Agreement, IBM shall stop all work as of the date of termination set forth in the notice of termination. WSI shall owe IBM for all Services performed and all Travel and Incidental Expenses incurred up to the effective date of termination set forth in the notice of termination. WSI shall not be obligated to pay for Services, Travel Expenses, or Incidental Expenses after the effective date of the termination to IBM unless WSI is obligated to pay additional Charges or Travel or Incidental Expenses in exercising its option under Section 19.1. Upon any termination of this Agreement each party shall also promptly return to the other all Materials owned by the other (except for copies authorized under this Agreement), all Confidential Information of other Party and provide to the other written confirmation that all such items have been returned or destroyed.


Security Exchange Commission - Edgar Database, EX-10.1 2 dex101.htm SERVICES AGREEMENT, Viewed May 10, 2021, < >.

Common Contracts with Termination Clauses

Common contracts with termination clauses include:

Here’s an article about drafting termination clauses.

Termination Clause FAQs

Termination clauses are essential to any contract. The termination clause FAQs below will help you understand them better:

What happens if there is a no termination clause in a contract?

You should determine if you have the right to termination if no termination clause exists in a contract. Contract lawyers will help you understand your legal options.

What is an exit clause in a contract?

Exit clauses, also known as escape clauses, in a contract allow one party to leave the agreement without having to follow through on their obligations.

Is a termination clause necessary?

Yes, termination clauses are necessary when drafting a contract. Using them in your agreements ensures that parties cannot arbitrarily abandon their obligations.

This article also addresses termination clauses.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.
Meet some lawyers on our platform

Benjamin W.

74 projects on CC
View Profile

Brian W.

4 projects on CC
View Profile

Gregory B.

163 projects on CC
View Profile

James H.

10 projects on CC
View Profile

Meet some of our Lawyers

Kenneth G. on ContractsCounsel
View Kenneth
4.7 (1)
Member Since:
November 25, 2023

Kenneth G.

Free Consultation
Washington, DC
17 Yrs Experience
Licensed in DC, PA
Georgetown University

I build legal solutions which create extraordinary value for my clients. I am a partner in Alliance Law Firm International PLLC in Washington. My specialties include tax, wealth management, estates, corporations/business, venture capital, private equity, and natural resources. Prior to practicing law, I had a decade-long career in international private equity and investment banking. I have worked on building and managing companies in technology, energy, materials, retail, and natural resources. I am licensed to practice in the District of Columbia and Pennsylvania. I have degrees from the Georgetown University Law Center (JD) and the Yale School of Management (MBA).

Muhammad Yar L. on ContractsCounsel
View Muhammad Yar
Member Since:
November 16, 2023

Muhammad Yar L.

Business Lawyer
Free Consultation
6 Yrs Experience
Licensed in NY
University of London

I am Muhammad, a legal counsel, technology law advisor, and corporate and commercial law expert, licensed to practice in New York State. I graduated from University of London and Georgetown Law Center and have about 5 years of experience in corporate and commercial law. As a As a technology law advisor, I possess deep insights into SaaS agreements, master service agreements, master subscription agreements, and SaaS Agreements, among others.

Alexandra I. on ContractsCounsel
View Alexandra
Member Since:
November 17, 2023

Alexandra I.

Contract Attorney
Free Consultation
Hollywood, California
3 Yrs Experience
Licensed in CA
Southwestern Law School

I am a licensed attorney in California specializing in consumer contract law. My areas of expertise include contract law and employment law, including independent contractor compliance, work-for-hire compliance and general corporate law. I appreciate getting to know my clients and enjoy providing legal guidance, whether they are large corporations, young start-ups about to take off, or just one person in need of legal advice. Some of my recent work has included the drafting of corporate purchase and sale agreements, independent contractor agreements, nondisclosure agreements, and software as a service (SaaS) agreements. I am well-versed in intellectual property law and have successfully obtained trademarks for former clients. My passion for learning, reading and writing has proved advantageous in my practice. I complete continuing education courses to stay current on industry best practices. I take great satisfaction in offering precise and helpful legal advice free from fancy terminology. I look forward to discussing your particular needs and supporting you in achieving your objectives. Please get in touch to learn more about my approach and see whether we are a good fit.

Jana B. on ContractsCounsel
View Jana
Member Since:
November 21, 2023

Jana B.

Commercial & Privacy Lawyer
Free Consultation
San Francisco
18 Yrs Experience
Licensed in CA
Universtiy of San Francisco

I am a Silicon Valley tech lawyer with over 13 years of in-house experience and additional years in BigLaw. I provide tech licensing, data privacy, employment, international expansion, go to market, and other corporate and commercial legal services to clients in software, SaaS, bio-tech, cryptocurrency, financing, and construction business. I currently run my own practice concentrating on transactional, commercial, corporate or employment matters. Prior to starting my own practice, I joined as the first in-house counsel to lead the global legal strategy to bring tech products to market, increase revenue, decrease exposure to risk, and raise venture funding for HashiCorp Inc., currently an unicorn technology company with evaluation over $5 billion and venture funding over $350 million; Sysdig Inc., a technology company with venture funding of $195 million; and Anaplan Inc., currently a publicly traded company on the US Stock Market. Furthermore, I acted as in-house counsel advising leading technology enterprise companies such as HP, VMware, and Genentech and currently act as member of strategic advisory boards to several technology companies located globally

Andrew R. on ContractsCounsel
View Andrew
Member Since:
November 28, 2023

Andrew R.

Staff Attorney
Free Consultation
New York, NY
2 Yrs Experience
Licensed in NY
Benjamin N. Cardozo School of Law, Yeshiva University

I'm a tenants rights attorney based (and licensed) in New York. My expertise includes filing complaints and responsive pleadings as well as reviewing leases and contracts and motion practice.

Jennifer G. on ContractsCounsel
View Jennifer
Member Since:
November 28, 2023

Jennifer G.

Free Consultation
Seattle, WA
8 Yrs Experience
Licensed in WA
UCLA School of Law

I'm Jennifer Gunnell, a seasoned legal professional with a J.D. from the University of California, Los Angeles School of Law. I have extensive experience in litigation, family law, and public service work. My career began at Schonburn Seplow Harris & Hoffman in Los Angeles, focusing on civil litigation in environmental and civil rights issues. I then joined the American Civil Liberties Union of Washington as a Staff Attorney, where I authored policy documents, coordinated civil litigation, and engaged with stakeholders on civil rights issues. Subsequently, I managed legal representation for low-income survivors of domestic violence at Snohomish County Legal Services, addressing county and state issues related to domestic violence and sexual assault. As an Assistant Attorney General at the Attorney General's Office of Washington, I led multiple jury trials, directed trial teams, and reported on legal and legislative changes. My international experience includes a role at the United Nations Office of the High Commissioner for Human Rights in Geneva, where I provided support to the Special Rapporteur for the Independence of Judges and Lawyers. I'm a member of the State Bar of California (2016, now retired) and the State Bar of Washington (2018, active). Beyond my professional endeavors, I've volunteered as an Attorney General Legal Hotline Volunteer, Domestic Violence Clinic Volunteer, Northwest Immigrant Rights Project Volunteer, and Seattle Animal Shelter Volunteer and Dog Foster. With a comprehensive legal background and a tenacious attitude, I bring dedication and expertise to every role.

Find the best lawyer for your project

Browse Lawyers Now
CONTRACT lawyers by city

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Find lawyers and attorneys by city