Termination for Convenience

Termination for convenience (TFC) is a contractual provision allowing one party to unilaterally terminate a contract without cause, subject to providing notice and possibly compensating the other party. This clause is commonly included in government and commercial contracts, allowing the terminating party to end the contract for reasons other than breach or failure to meet contractual obligations.

Inclusive Elements

• Unilateral decision-making: One party can decide to terminate without the need for mutual agreement.
• Notice requirement: The party initiating termination must provide advance notice to the other party.
• Compensation: The contract may require the terminating party to compensate the other party for work completed or expenses incurred up to the point of termination.

Exclusive Elements

• Termination for cause: This is distinct from termination for convenience, as it involves ending a contract due to breach or failure to perform.
• Mutual agreement: TFC does not require the consent of both parties, unlike mutual termination agreements.

Exceptions and Qualifications

There are exceptions where TFC may not be applicable or enforceable, such as contracts governed by specific laws that restrict unilateral termination without cause, or when the termination would cause undue hardship or violate principles of good faith and fair dealing.