Termination for Convenience

In one sentence

Ending a contract without cause, usually by paying a penalty or notice fee.

Plain English

Termination for convenience allows one or both parties to end a contract whenever they want, even if the other side is performing perfectly. The catch is that the terminating party usually has to pay a penalty, provide advance notice, or compensate the other side for losses. This clause gives flexibility but comes at a cost. It's common in service contracts, government agreements, and long-term deals.

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Example

A software company signs a five-year support contract with a client. After two years, the client's business changes direction and no longer needs the service. If the contract includes a termination-for-convenience clause, the client can end it by paying a $50,000 early termination fee.

Used in a sentence

“The supplier included a termination for convenience clause allowing either party to exit with 90 days' notice.”

Related terms

Discharge of Contract

The release of both parties from their contractual obligations.

Contract

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

Liquidated Damages

A fixed amount both parties agree in advance the breaching party must pay.

Performance

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

Express Warranty

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

Covenant

A binding promise in a contract to do or not do something.

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.