Effect of Termination

Contract Type:
Generic Contract

Upon termination of this Agreement for any reason: - Any rights or obligations which accrued prior to termination shall survive. - Each party shall promptly return to the other party all papers, materials, and other properties of the other held by each for purposes of performance of this Agreement. - Each party shall cease using the other party’s intellectual property and shall return or destroy at the other party’s request all materials containing such intellectual property. - Termination of this Agreement shall not affect any rights of action accruing prior to termination.


Here is a plain English explanation of the Effect of Termination clause:

This clause explains what happens when the contract ends or is terminated.

It states that:

- Any rights or duties that applied before termination still apply afterwards. The termination does not cancel them out.

- The parties must promptly return any property or materials belonging to the other party that they held for the contract.

- The parties must stop using any intellectual property of the other party. They must return or destroy materials with the IP if asked.

- Termination does not affect any legal rights of action that either party had before the termination. They can still pursue these rights.

In summary, this clause clarifies key aspects that remain applicable post-termination and the return of property and IP. It maintains legal rights accrued prior to termination.

The purpose is to prevent disputes on these issues if the contract ends.

History of the clause (for the geeks)

Effect of termination clauses evolved to address the consequences of ended contracts.

Key historical developments include:

Early common law focused on breach and remedies. Drafting on termination effects was minimal aside from ending performance duties.

The rise of complex agreements with ongoing licenses and payments necessitated clearer termination provisions to wind down the relationship.

Intellectual property issues came to the fore with technology licensing. Termination clauses addressed IP ownership, return and phase-out of rights.

Standardization of transactions led businesses to pre-emptively list termination results to avoid future disputes.

As contracts got larger, termination clauses helped preserve discretely negotiated or severable portions.

Termination rights expanded via statutes allowing for public policy, unconscionability and other concerns. Clauses adapted.

The software boom raised new termination challenges around source code escrows and transition assistance.

Globalization led to termination clauses dealing with cross-border enforcement, governing law disputes and geo-blocking.

In summary, termination clauses evolved from a simplistic common law remnant to sophisticated provisions delineating post-termination rights, obligations and procedures reflecting the complexities of modern contracting.