Cure period clause: time to fix a breach before termination

Sample clause

Written for a web maintenance agreement between Kestrel Digital and Saltbush Brewing, a fictional craft brewery in Ballarat.

Notice to Remedy. (a) If a party believes the other has breached this agreement, it may give that party a written notice describing the breach, the clause breached, and what must be done to remedy it. (b) The party who receives a notice under paragraph (a) must remedy the breach within: (i) 5 business days, for a failure to pay an undisputed invoice; (ii) 10 business days, for a failure to meet a Service Level in Schedule 2; and (iii) 20 business days, for any other breach capable of remedy. (c) No cure period applies to a breach of clause 9 (Confidentiality), a breach of clause 12 (Work Health and Safety), or a breach that by its nature cannot be remedied, and the party not in breach may end this agreement immediately by written notice. (d) If a party remedies the same breach twice in any rolling six month period, the other party may end this agreement on a third occurrence without giving a further cure period.

Sample wording, not legal advice.

Variants

What to negotiate

• One period or several

  A single period is simpler to draft and harder to live with. Customers want a short window for payment and performance failures; suppliers want a longer one where a fix depends on a third party. The compromise most contracts reach is a short default with two or three named exceptions, which fits on half a page and removes the argument about whether ten days was reasonable.

• Which breaches get no cure period at all

  Confidentiality, safety and anti bribery failures are the usual list, because the harm has already happened by the time the notice arrives. Suppliers push to keep the list short, since an immediate termination right removes their chance to respond. The settlement is a closed list stated in the clause, rather than an open reference to serious breaches that nobody can apply with confidence.

• What happens on a repeat

  A party can breach, cure, and repeat indefinitely without ever triggering termination. Customers ask for a repeat rule, commonly allowing termination on a third occurrence of the same breach within six months. Suppliers ask that the rule apply to the same breach rather than any breach, and that a remediation plan be available first. Both limits usually survive.

• Whether curing wipes out the loss

  Remedying a breach stops the termination right; it does not reverse the damage the breach already caused. Contracts that do not say so invite an argument that a cured breach is treated as if it never happened. A single sentence confirming that a party remains liable for loss suffered before the remedy settles the point before it becomes a dispute.

The risk of leaving it out

Without a cure period, every breach that gives a right to terminate can be acted on the same day, which makes the relationship fragile and the termination right easy to abuse. It also removes the notice step, so the party at fault may first learn of the problem from a termination letter rather than from a request to fix something.

The notice is half of the clause

A cure period only works if the party in breach knows exactly what to fix and by when. A notice that says the supplier is in material breach of the agreement, with no more detail, starts a clock that nobody can meet and is often ineffective. Good drafting requires the notice to identify the clause breached, the facts relied on and the remedy sought, and to be delivered in the way the notices clause prescribes. Stating the deadline as a date rather than a number of days removes the second most common argument, which is whether the period ran in business days or calendar days and when it started.

Breaches that cannot be cured

Some failures cannot be undone. Confidential information that has been published stays published; a safety incident has already occurred; a deadline that mattered has passed. A cure period for these is not a protection, it is a delay. That is why most contracts pair the cure regime with a short closed list of breaches that allow immediate termination, plus a general sentence covering any breach that by its nature cannot be remedied. The general sentence matters because no list anticipates everything, and without it a party may be forced to give twenty days to fix something that cannot be fixed.

How it fits with termination at common law

A cure period sits on top of the general law, it does not replace it. In Australia a party can terminate at common law for repudiation, for breach of an essential term, or for a sufficiently serious breach of an intermediate term, the test the High Court applied in Koompahtoo v Sanpine (2007). A contractual right to terminate after an uncured notice is often easier to use than those tests, but Shevill v Builders Licensing Board (1982) shows the trade off: ending a contract under an express right does not by itself give damages for the loss of the whole bargain unless the breach would also have justified termination at common law. The notice step matters too. Where time was not essential, Legione v Hateley (1983) confirms that a notice making it essential must allow a reasonable time to perform. In a standard form contract with a small business, a one sided termination right can also be tested as unfair under the Australian Consumer Law.

Documents that carry this clause

Service agreement template with scope, service levels and an exitA service agreement template has to say what is supplied, how well, for what fee, who is liable for what, and how either side gets out. This one is filled in for Beacon Systems supporting Harlow Freight's IT for an initial 24 months from 1 October 2026 at $8,400 a month plus GST, with 40 hours included and $220 an hour beyond them. Twelve numbered clauses cover the services, a four level severity table, client duties, fees with a CPI adjustment, confidentiality, privacy, IP, a liability cap, termination and a three step dispute ladder under Victorian law.Freelance contractA brand designer and a bakery owner agree five weeks of work in language they can both read. It covers everything a longer contract would, and it never once says party of the first part.Written warning letter template that records the process, not just the problemA warning letter is evidence that a fair process happened, and most fail because they record the problem and skip the meeting, the response and the review date. This one records all four, states the consequence in one sentence, and ends with an acknowledgement the employee can sign without admitting anything.

Questions people ask