Termination for Cause

In one sentence

Ending a contract due to the other party's breach or serious misconduct.

Plain English

Termination for cause means one party can end a contract early because the other party has broken an important term or acted seriously wrong. This is different from just walking away—you need a legitimate reason, usually spelled out in the contract itself. Common reasons include failure to pay, non-performance of key duties, or illegal conduct. The party terminating must typically give notice and sometimes a chance to fix the problem first.

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Example

An employer hires a manager under a three-year contract. After six months, the manager is caught stealing from the company. The employer can terminate the contract for cause immediately without paying out the remaining salary, because theft is a serious breach.

Used in a sentence

“The company exercised termination for cause when the employee repeatedly violated the non-compete agreement.”

Related terms

Discharge of Contract

The release of both parties from their contractual obligations.

Breach

A failure to do what a contract requires, such as not paying or not delivering.

Performance

The act of doing what a contract requires, such as delivering goods or paying money.

Contract

A legally binding agreement between two or more parties to do or not do something.

Material Alteration

A significant change to a contract or document that affects its meaning or enforceability.

Express Warranty

A clear, direct promise about a product's quality, performance, or characteristics.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.