Either party may terminate this Agreement immediately by giving written notice to the other party if: (a) the other party commits a material breach of this Agreement and, if such breach is capable of remedy, fails to remedy the breach within 30 days of being required by written notice to do so; (b) the other party ceases to carry on business or becomes insolvent. Upon termination of this Agreement, each party shall return to the other party all property and confidential information of the other party in its possession or control and shall cease using the other party's intellectual property rights. Termination of this Agreement shall not affect any rights or obligations which have accrued prior to termination. Clauses which expressly or by implication survive termination of this Agreement shall continue in full force and effect.
Here is a plain English explanation of the suggested Termination clause:
- This clause allows either party to end the contract immediately by giving written notice if:
1) The other party seriously breaches the contract and does not fix the breach within 30 days of being notified.
2) The other party goes out of business or becomes insolvent.
- When the contract is terminated, each party must return any property, confidential information, or intellectual property belonging to the other party.
- They must also stop using any of the other party's intellectual property rights.
- Ending the contract does not affect any rights or obligations that existed before termination.
- Any contract terms that are meant to continue after termination will stay in effect.
In summary, this clause permits the contract to be terminated for major breaches or business failure, while protecting accrued rights and setting obligations for returning property and winding down use of intellectual property.
Termination clauses have long been a standard part of commercial contracts to allow parties to end the agreement if certain conditions are met.
Their origins can be traced back to English common law, which recognized that contracts could be discharged or dissolved under certain circumstances, such as breach of contract. However, common law remedies were seen as inadequate, so termination clauses became a way for parties to clearly spell out the conditions under which the contract could be ended.
Termination clauses started becoming popular in commercial contracts in the late 19th century during the industrial revolution, when such contracts proliferated. Parties wanted the ability to terminate in case of non-performance. Specific events allowing termination were enumerated, like failure to make payments or deliver goods. The clauses provided an orderly exit, allowing the return of property and final accounting.
Over time, termination clauses evolved from simple breach clauses to the more robust provisions seen today. Events allowing termination expanded beyond just breach to include things like insolvency and change of control. Notice periods and cure periods were added, requiring warning before termination.
Boilerplate language developed covering the effect of termination and survival of provisions. Termination clauses are now a standard feature enabling parties to flexibly structure their contractual relationship.