Every small business’s client agreement should address how, if at all, a party to the contract can terminate the agreement early. We’ll cover three common options below, as well as provide some practical advice.
This option will give the client the unilateral right to terminate the agreement, for any reason, at any time. However, it will normally require some advance notice, like 15 or 30 days.
This option will give the contractor the unilateral right to terminate the agreement, for any reason, at any time. However, it will normally require some advance notice, like 15 or 30 days.
If you don’t include voluntary termination rights, or if you provide them with long advance notice requirements, you may want to include a breach and cure provision. What this says is that either party can terminate the agreement early if the other party fails to cure a breach of the contract within a set number of days (like ten) after receiving notice of the breach. This helps a party get out quickly if the other party is just not performing, but it also helps the other party to give them a chance to fix things.
If you allow early termination in any format, make sure the contract explains what happens after the early termination. For example, does the client need to pay for services rendered and/or expenses paid? What happens to down payments already paid? And does the contractor need to deliver the works in process?
There’s so much more to learn! Here are a few related guides you should read: