Reviewing a termination clause

A termination clause decides when a party can leave, what it has to do first, what it owes when it goes and what it can be sued for if it gets the process wrong. When a relationship is ending, every word of it matters: whether the breach was material, whether the remedy period ran, whether the notice went to the right address, and whether the party terminating has itself committed a breach that lets the other side terminate instead. I review the clause from whichever side instructs me and return it marked up with a written explanation of the grounds, the mechanics, the consequences and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales negotiating the termination provisions of a supply, services, software, distribution, agency, consultancy or outsourcing contract, or about to terminate or be terminated under one and wanting to know whether the clause allows it. Both parties are businesses.

What to look for in a termination clause

The grounds: material breach, persistent breach and the remedy period

The clause will allow termination for a material breach that is not remedied within a period after notice, and the review checks what counts as material, whether the clause lists breaches that are deemed material, whether a breach that cannot be remedied leads to immediate termination, whether repeated minor breaches can be aggregated, and how the remedy period runs. For a party wanting flexibility, the review adds specific triggers, non-payment beyond a stated period, failure to meet service levels for consecutive periods, loss of a licence or accreditation; for a party wanting stability, it removes deemed-material breaches and lengthens the cure period.

Insolvency triggers and what the statute now prevents

Contracts let a party terminate if the other becomes insolvent, and list the events: administration, liquidation, a moratorium, a company voluntary arrangement, inability to pay debts. Under section 233B of the Insolvency Act 1986, a supplier of goods or services cannot rely on such a clause to terminate the contract or the supply only because the customer has entered a relevant insolvency procedure, and cannot make continued supply conditional on payment of pre-insolvency debts, subject to the section's exceptions and to a hardship application. The review checks which party the restriction protects, drafts the insolvency triggers that remain effective, and adds a right to terminate for non-payment during the procedure, which the section preserves.

Termination at common law and the clause that adds to it

Whatever the clause says, a party can accept a repudiatory breach, a breach going to the root of the contract, as ending it, and the clause should say whether it adds to or replaces that right. The review checks that the contractual grounds do not inadvertently exclude the common law right, that a termination for a contractual ground does not require the party to show the breach was also repudiatory, and that the clause deals with an anticipatory breach, where the other party says it will not perform.

Notice: form, address, service and the mistake that costs the termination

A termination notice served in the wrong form, to the wrong address, or before the remedy period has expired can itself be a repudiatory breach that the other party accepts, turning the terminating party into the party in breach. The review checks the notices clause for the permitted methods, the addresses, deemed receipt and the position on email, and for a party about to terminate, checks the notice against the clause before it is sent, including whether the ground relied on is one the clause provides.

What happens on termination and what survives

The clause should set out the consequences: payment for work done and goods delivered, return of property and data, cessation of licences, delivery of work in progress, and the provisions that survive, such as confidentiality, liability, intellectual property, restrictive covenants and accrued rights. The review checks each against the party's position, adds a survival clause where none exists, and checks that termination does not extinguish accrued claims, on which interest continues under the Late Payment of Commercial Debts (Interest) Act 1998 for a commercial debt, and that a limitation period under section 5 of the Limitation Act 1980 is not shortened by a contractual claims bar the party did not notice.

Damages, wrongful termination and the party who leaves early

A party that terminates without a contractual or common law ground is in repudiatory breach and liable for the other party's loss of bargain, and a clause that fixes a sum payable on termination is enforceable only if it is not out of all proportion to the innocent party's legitimate interest, under the rule in Cavendish Square Holding BV v Makdessi [2015] UKSC 67. In Bunge SA v Nidera BV [2015] UKSC 43 the Supreme Court confirmed that damages for a wrongful termination are assessed by reference to what would in fact have happened had the contract continued. The review sets out what each side would owe on a wrongful termination and drafts the clause so that the consequences of leaving are what the parties intend.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The other side has breached the contract. Can we terminate?

Only if the breach is a ground the clause provides, or is serious enough to be repudiatory at common law, and only after any remedy period has run and notice has been served in the required form. The review checks each point before you act, because a wrongful termination makes you the party in breach.

Our customer has gone into administration. Can we stop supplying?

Not on that ground alone: section 233B of the Insolvency Act 1986 stops a supplier terminating a contract or supply only because the customer has entered an insolvency procedure. You can terminate for non-payment during the procedure and in the other cases the section allows. The review sets out the position for your contract.

The contract says the supplier can terminate if we commit any breach. Is that normal?

It is in suppliers' first drafts, and it gives the supplier a right to leave for a trivial default. The review asks for termination for material breach only, with a remedy period, and for the breaches that are deemed material to be listed and limited.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a termination for convenience clause
• Reviewing an exit and transition clause

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.