Reviewing a termination for convenience clause

A termination for convenience clause lets a party end the contract because it wants to, on notice, without a breach by the other side. For the party holding it, it is flexibility; for the party exposed to it, it means that the term, the investment and the pricing all depend on a right the other side can exercise at any time. Whether the clause is acceptable turns on the notice period, on what is paid when it is used, and on whether it is mutual. I review the clause from whichever side instructs me and return it marked up with a written explanation of the exposure, the payment the terminated party should receive, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Suppliers, contractors and service providers in England and Wales whose customers reserve the right to terminate without cause, and customers wanting that right in a supply, services, outsourcing, construction, consultancy or public sector contract. Both parties are businesses; public bodies use termination for convenience as a standard term and the Procurement Act 2023 adds implied rights.

What to look for in a termination for convenience clause

The notice period and the investment it has to cover

A supplier prices a contract on its term, recovers set-up costs over that term and commits to staff, premises, stock and sub-contracts on the strength of it. A termination for convenience right on short notice puts that investment at risk. The review checks the notice period against the supplier's payback period, asks for a minimum term before the right can be exercised, and for notice long enough to wind the work down, redeploy staff and run out sub-contracts.

The payment on termination: recovering the investment

The clause should say what the terminated party is paid: work done and goods delivered to the date of termination, committed costs that cannot be cancelled, demobilisation, and a sum for unrecovered investment or lost margin on the remaining term. A fixed termination fee is enforceable only if it is not out of all proportion to the terminating party's legitimate interest in the sense of Cavendish Square Holding BV v Makdessi [2015] UKSC 67, so the review drafts a formula tied to actual costs and unrecovered set-up costs rather than a round sum, and checks that the customer's payment obligations survive termination with interest under the Late Payment of Commercial Debts (Interest) Act 1998.

Mutuality, and the supplier's own right to leave

A customer's termination for convenience right without a matching right for the supplier leaves the supplier committed for the term while the customer is not, and the review asks for either a mutual right on the same notice, or a longer notice period and a termination payment for the party that has no right. It also checks that the customer's right cannot be used to avoid a price increase, a renewal or a dispute, and that the supplier's own termination rights for non-payment remain.

The public sector version and the implied terms

Public bodies reserve termination for convenience in every contract, and under the Procurement Act 2023 certain termination rights are implied into public contracts by section 78, alongside the contracting authority's own express rights. A supplier to a public body cannot remove the right, so the review concentrates on the notice period, the payment on termination and the treatment of sub-contracts, staff who may transfer under regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006, and the exit obligations the authority will impose.

Partial termination, scope reduction and the contract that shrinks

Some clauses allow termination of part of the services or a reduction in scope on notice, which reduces the supplier's revenue without ending the contract. The review checks whether partial termination is permitted, whether the price for the remaining services is adjusted, whether minimum volumes protect the supplier, and whether the supplier may terminate the whole contract if the customer removes enough of it.

Wind-down, handover and the sub-contracts left behind

Termination for convenience should carry the same wind-down obligations as any termination: payment for work in progress, return of property and data, handover to a successor, and the treatment of the supplier's own sub-contracts, which the supplier may have to terminate at a cost. The review asks for the customer to bear the cost of sub-contracts entered into with its approval, for a transition period at the contract rates, and for the terminated party's confidentiality and intellectual property protections to survive.

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

Our customer can terminate on thirty days' notice for no reason. Should we accept that?

Only with a minimum term before the right can be used, notice long enough to wind down, and a termination payment that recovers your unrecovered set-up costs and committed spend. The review drafts those and gives you the case to put to the customer.

Can we charge a termination fee if the customer leaves early?

You can, if it reflects your legitimate interest and is not out of all proportion to it; a round sum unrelated to your loss risks being an unenforceable penalty. The review drafts a formula tied to actual and committed costs and unrecovered investment.

The council's contract has termination for convenience and we cannot change it. What can we do?

Concentrate on what moves: the notice period, the payment on termination, the treatment of your sub-contracts and staff, and the exit obligations. The review sets out what a contracting authority will accept on each.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a termination clause
• Reviewing a subcontract under a government contract

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.