What is termination for convenience?
Termination for convenience is a clause in a contract that allows one or both parties to end the contract without having to provide a specific reason or justification. This is distinct from termination for cause, where one party is able to terminate if the other breaches the terms of the agreement. A termination for convenience clause often includes a set notice period, providing time for both parties to fulfill outstanding obligations and mitigate any potential disruption.
In the context of a Cloud Service Agreement, the right to terminate for convenience might be limited to a specific time period after the contract has been signed. For example, either party might have the right to terminate for convenience after twelve months, provided that they give 45 days’ notice.
Why might a software buyer want to include a termination for convenience clause?
A buyer may feel like they’re taking a risk when purchasing a new product. Including a termination for convenience clause in the contract gives the buyer some assurance they can terminate the contract and replace the product if it doesn’t live up to expectations.
Sample language
Written to work with Common Paper standard agreements.
Right to terminate for convenience after set time period
Cloud Service Agreement version: 2.0
Add as Section 5.3(c): “after the first { 12 months } of the Agreement for any reason or no reason by giving the other party { 45 } days prior notice.”
Cloud Service Agreement version: 1.0, 1.1
Add as Section 6.3: “In addition, after the first { 12 months } of the Agreement, either party may terminate this Agreement for any reason or no reason by giving the other party { 45 } days prior notice.”