Termination for Convenience Clauses. Consider whether adding a termination for convenience clause to your contracts makes sense. Particularly for nonprofit organizations, I have been adding in language to third-party services contracts that allow for exit/termination for any reason. This language, if negotiated properly, allows for easy and low-to-no cost exits if you need to get out of an arrangement. Of course one size does not fit all. So careful analysis of the terms and conditions along with intent of the parties would be necessary to understand if a TCC would work on a particular deal.
But what if the vendor says no? My attitude is this, especially for nonprofits, if someone wants to do business with you they need to respect the charitable needs of your organization. I have seen numerous nonprofit organizations get themselves into contracts that don’t work out as expected. Or maybe economic conditions change and donor gifts slow down making payment for services difficult. Whatever the reason, a termination for convenience clause, in theory, allows for a simple exist at little to no cost (depending on obligations under the contract). An example of such a clause would look something like this:
Termination for Convenience.
“Client may terminate this agreement at any time and for any reason by providing Contractor with 30 days written notice.” Or
“Client may terminate this agreement for convenience by providing Service Provider with 14 days written notice.”
Of course it is important to also address obligations of either party upon termination. Further, if there is pushback by the third-party contractor, the termination for convenience clause may be made reciprocal providing the contractor with the same terms for exist.
Be sure to get legal advice on any contract. This short explanation on termination for convenience clauses is in no way intended to be legal advice. No attorney client relationship exists unless established in writing. Contact me to learn more.
Best wishes in all of your endeavors!
Law Office of Royce Aaron Hood
MissionCounsel.com / RHoodLaw