A clear termination clause

All good things must come to an end. So, too, must every contract. In an ideal world, a contract terminates when all parties have done what they promised to do in the contract. In the real world, the exact date of termination is murky when one party doesn’t perform its promises, can’t perform its promises, and a myriad of other reasons impacting performance and unclear termination provisions.

When faced with an unclear termination clause, what’s a businessperson to do?

The best option is for the businessperson to plan in advance for contingencies and determine what you want to happen if and when those contingencies arise.  Different contingencies call for different termination provisions. For instance, if you’ve contracted with the band Journey to play your high school reunion, you’ll likely want the contract to terminate automatically if Journey can’t play. You wouldn’t want a provision that provides you the option to terminate, subject to providing 5 days advance notice, when the Backstreet Boys show up instead of Journey.  Simply put, a proper termination provision allows you to get out of a contract if you don’t get what you bargained for (in this case Journey v. the Backstreet Boys). An improper termination provision may bind you to a contract you don’t want.

In some situations, you may want the contract to automatically terminate to protect your interests. In others, you may instead prefer the option to terminate, which allows you to make a termination decision when you confront the specific situation you anticipate. In either case, consulting an attorney will help you determine how the contract will address the many things that might frustrate the contract’s original purpose.  The lawyers of Winslow & McCurry can help you craft a proper termination clause.  Please call our office at 804.423.1382 to set up an intial consultation.