Termination for Convenience: The Clause Every Business Wishes It Had

The Commercial Reality: When Strategy Changes, Contracts Need to Move With It

In uncertain economic periods, businesses find themselves reassessing long-standing

relationships. Not because the supplier did anything wrong, but because the commercial

rationale has shifted. New budget constraints. A change in focus. A project no longer viable.

This is where a termination-for-convenience clause earns its keep.

What This Clause Actually Does

A termination for convenience clause allows a party (sometimes both parties, sometimes just the customer) to end the contract without having to justify the decision.

No breach required.

No need to gather evidence.

No need to prove impact.

It is, effectively, a “commercial exit route” and arguably one of the most valuable rights a

business can have, especially during turbulent times.

Why Suppliers Push Back Hard

Suppliers routinely resist this clause because it introduces uncertainty into their revenue

streams. Typical objections include:

• They need a predictable income to justify resourcing

• They fear customers “walking away” after they’ve invested time or onboarding costs

• They want contracts to reflect stability and long-term commitment

  
  

As a result, many businesses accept its removal during negotiations, only realising the cost of that compromise months or years later.

Fees, Costs, and Notice Periods: The Hidden Architecture

Termination for convenience isn’t usually free. Clauses often include:

• Notice periods (e.g., 30–90 days)

• Contributions to the supplier’s lost margin or set-up fees

• Obligations to return or transition data, equipment, or services

What to Watch For When Negotiating This Clause

• Does it apply to both parties or only one?

• Are fees proportionate to actual loss, or inflated?

• Is the notice period workable?

• Does the clause trigger termination of related agreements?

• Is transition support included?

Need clarity on whether a termination-for-convenience clause could help your

business?

We can review your contract, identify your options, and help you negotiate stronger rights going forward. Call us or email us, and we’ll tell you exactly where you stand.