Step-In Rights
Also called: Step-In Clause · Take-Over Rights
Step-in rights allow a customer (or, in financed projects, a lender) to temporarily take over performance of a contract — or bring in a replacement provider — if the original provider fails to perform, without immediately terminating the entire relationship. It's a middle option between tolerating poor performance and full termination.
In more detail
Full termination for breach is often disproportionate for an ongoing, business-critical service — stepping in to fix or replace the failing part of performance can keep the underlying relationship and its other benefits intact while addressing the specific failure.
This clause is especially common in outsourcing and infrastructure contracts, where switching providers entirely is costly and disruptive, but continuing to accept failed performance isn't acceptable either.
The clause needs to specify what triggers step-in rights (a defined performance failure, not just dissatisfaction), the process for exercising them, and how costs of the step-in are allocated between the parties.
An IT infrastructure vendor repeatedly misses agreed uptime targets. Rather than terminating the entire multi-year contract, the customer exercises step-in rights to bring in a specialist third party to manage the failing component, while the rest of the contract continues.
What our lawyers check
- What specific failures trigger step-in rights
- The process and notice required before stepping in
- How costs of step-in are allocated between the parties
- Whether step-in is a precursor to termination or a genuine alternative to it
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms