Clause library

Termination clause, explained

A termination clause sets out how and when either party can end the contract, and what happens when it ends.

What does a termination clause do?

A termination clause covers the ways a contract can end before the work is complete. Most clauses allow termination for convenience on a period of notice, and immediate termination for serious breach or insolvency. Many give the party in breach a chance to fix the problem first, often within 14 or 30 days. The clause also sets out what happens next: paying for work done, returning materials and confidential information, and which terms carry on after the end, such as confidentiality and limitation of liability.

Example wording

Example · our own drafting

Either party may terminate this agreement on [30] days' written notice. Either party may terminate immediately by written notice if the other commits a material breach that is not remedied within [14] days of being notified of it. On termination, the Client will pay for all work performed up to the termination date.

In Plain English

Either side can end the contract by giving 30 days' notice in writing. If one side seriously breaks the contract and does not fix it within 14 days of being told, the other can end it straight away. Either way, the client pays for the work done up to the end date.

What do people negotiate in a termination clause?

  • Whether both parties can terminate for convenience, or only one.
  • The length of the notice period.
  • Whether there is a cure period for breach, and how long it is.
  • What is paid on termination, including work in progress or a kill fee.
  • Which clauses survive termination.

Which contracts include it?

Lex includes this clause in, among others:

  • Mutual NDA
  • Services agreement (MSA)
  • Freelancer agreement
  • Consulting agreement
  • Retainer agreement
  • Photography licence

Draft a mutual NDA with this clause

Free for the other side

Lex drafts it in Plain English beside the legal wording. Share one link; both sides agree and sign.

Frequently asked questions

What is a termination clause?

It is the part of a contract that explains how either party can end it early, how much notice is given, and what each side owes once it ends.

What is termination for convenience?

It means ending the contract without needing a reason, usually by giving a set period of notice. Not every contract allows it.

What happens to payment when a contract is terminated?

It depends on the clause. Many clauses say the client pays for work done up to the termination date, and some add a kill fee or payment for committed costs.

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