Termination for Cause
Also called: Termination for Breach · Termination for Default
Termination for cause allows a party to end a contract because of the other side’s failure — typically material breach, insolvency, or prolonged force majeure. Unlike termination for convenience, it requires a triggering event and usually carries no exit fee.
In more detail
The pivotal concept is materiality. Contracts rarely define "material breach", which means the terminating party is making a judgment call that can itself be challenged — and wrongful termination is a breach in its own right.
Cure periods are the standard mitigation: the breaching party gets a defined window to fix the problem before termination takes effect. Well-drafted clauses distinguish curable breaches from incurable ones, where immediate termination is justified.
Insolvency triggers deserve separate attention, as their effectiveness can be constrained by insolvency law regardless of what the contract says.
What our lawyers check
- Whether "material breach" is defined or left to argument
- Cure period length, and whether it is realistic for the obligations involved
- Which breaches justify immediate termination without cure
- Consequences on termination — payment, data return, transition assistance
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.
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