Termination for convenience clause

Sample clause

a marketing retainer between Fernhill Consulting and Saltbush Brewing, a fictional craft brewery in Ballarat

1. Termination for Convenience. Either party may end this agreement at any time by giving the other 30 days written notice. No reason needs to be given. 1.1 During the notice period the Agency must continue to deliver the Services, and the Client must continue to pay for them. 2. Payment on Termination. On the effective date of termination the Client must pay the Agency for Services delivered up to that date, together with any work in progress at the hourly rates in Schedule 1, and any third party costs the Agency has committed that it cannot cancel. 2.1 The Agency must use reasonable efforts to cancel or reduce committed third party costs, and must produce evidence of any amount claimed under clause 2. 3. Prepaid Fees. Any fees the Client has paid for Services not yet delivered must be refunded within 20 business days of the effective date of termination. 4. Handover. On termination the Agency must deliver the Client's brand files, campaign data and account access within 10 business days.

Sample wording, not legal advice.

Variants

What to negotiate

• Whether the right is mutual

  Customers often propose a right they hold alone, which leaves the supplier committed while the customer is not. Suppliers argue that a one sided right in a standard form small business contract is exactly the shape a regulator looks at. The usual landing point is either a mutual right on the same notice, or a customer only right paired with a longer notice period and a wind down payment.

• How long the notice period runs

  Notice length is really a staffing question. A supplier with people assigned to the account wants long enough to redeploy them, commonly 60 or 90 days. Customers want out quickly. Terms often settle at 30 days for a retainer, longer where the supplier holds dedicated staff or equipment, and shorter in the first months where little has been committed.

• What gets paid on the way out

  Work delivered is never in dispute. The arguments are about work in progress, committed third party costs and unamortised setup. Suppliers want all three covered; customers want evidence and a duty to mitigate. The settlement is usually payment for delivered work and work in progress, plus committed costs the supplier can show it could not cancel.

• Whether handover is part of the exit

  A convenience right that leaves the customer without its own data is a right it cannot use. Customers ask for files, access and a short knowledge transfer as a condition of the exit. Suppliers accept a defined list with a deadline, and often ask for anything beyond that list to be paid at standard rates under a transition assistance clause.

The risk of leaving it out

Without the clause a party that wants out has to find a breach, prove it is serious enough to justify ending the contract, and accept the risk of being wrong. Getting that judgement wrong is itself a repudiation, so a business with no convenience right often keeps paying for a service it no longer wants rather than take the chance.

Why a convenience right changes the negotiation

Once either side can leave on notice, every other lever in the contract loses some of its force. Long terms stop protecting revenue, minimum commitments stop being minimums, and price increases become easier to resist because the answer to them is a notice letter. That is why suppliers resist a customer side convenience right, or price it. The usual compromise is not to remove the right but to condition it: a minimum period before it can be used, a notice period long enough to redeploy people, and a defined exit payment so that leaving early is a known cost rather than a free option.

Termination for convenience against termination for cause

The two rights do different jobs and both belong in most contracts. A cause right ends the agreement because the other side failed, usually after a notice to remedy, and it carries consequences such as loss of transition help or a claim for damages. A convenience right ends the agreement because circumstances changed, and it carries a payment rather than a claim. Using a convenience right to exit a supplier that has actually breached is common and sensible, because it avoids the argument about whether the breach was material, but it also gives up any damages claim tied to the breach.

Where it sits in a generated document

The document generator writes an agreement as numbered content, so a convenience right usually appears inside the termination clause with the payment consequences as sub clauses under it. The generated text is written from the description it is given and it never prints citations, so any notice period or percentage in a draft has to be checked against the deal before the document is used. Describing both the notice period and what is paid on exit produces both as numbered provisions, which is easier than editing them in afterwards.

Documents that carry this clause

Monthly retainer agreementA studio sells a physio practice twenty four hours a month. Almost every clause exists to answer one question that ordinary contracts duck: what happens to the hours nobody used.Consulting agreementAn advisory firm reviews three bakeries over seven weeks. What makes this agreement useful is not the fee clause but the two clauses that say what the advice is not.Service agreementBeacon Systems supports 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.

Questions people ask