Termination clause; and post contractual obligations
Outline
- Termination Clause
◼ Review
◼ Applicable laws
◼ Terminology and heading
◼ Location in contract
◼ Relationship of the clause to other contracts
◼ Unilateral/and bilateral (symmetrical or asymmetrical)
◼ Categories
◼ Consequences.
- Post-Contractual Obligations
- Review of examples
Termination Clause
- Termination clauses set out the express grounds upon which a contract may be brought to an
end. They're also known as "break clauses" in some circles. In the business environment,
termination clauses specify rights to bring a contract to an end for specified reasons.
- “In the event of the Employer:
- (a) failing to pay to the Contractor the amount due under any certificate of the Engineer
within 28 days after the expiry of the time stated in Sub-Clause 60.10 within which payment
is to be made, subject to any deduction that the Employer is entitled to make under the
Contract, or
- (b) interfering with or obstructing or refusing any required approval to the issue of any such
certificate, or
- (c) becoming bankrupt or, being a company, going into liquidation, other than for the purpose
of a scheme of reconstruction or amalgamation, or
- (d) giving notice to the Contractor that for unforeseen reasons, due to economic dislocation, it
is impossible for him to continue to meet his contractual obligations the Contractor shall be
entitled to terminate his employment under the Contract by giving notice to the Employer,
with a copy to the Engineer. Such termination shall take effect 14 days after the giving of the
notice.”
- The Red Book, FIDIC, Lausanne, 4th ed, 1989
Termination Clause – Application Laws:
1
, Termination clause; and post contractual obligations
- National law
◼ Deals with the termination of contractual obligation
- Uniform laws
- Mandatory rules
◼ Such as protection of consumer
➢ Precedent:
◼ At termination, the commercial agent is, as a matter of principle, entitled to an indemnity
or compensation. Case Conseils et mise en relations (CMR) SARL, ECJ decision of
19 April 2018, C-645/16
◼ What is a commercial agent? The Regulations define a commercial agent as a "self-
employed intermediary who has continuing authority to negotiate the sale or purchase of
goods on behalf of their principal or to negotiate and conclude such transactions on behalf
of and in the name of that principal"
Termination Clause – Terminology and Headings
- No universal terminology
- Headings
◼ Termination
◼ Postponement and Termination
◼ Termination and Cancellation
◼ Default
◼ Default and Liquidation
◼ Reciliation
◼ Interruption of the Loan-Events of Default
Relation to the other contracts:
- Group of Contracts:
- "The Pre-Bid Agreement shall terminate on any of the following occurrences:
- b) Failure of the Parties to agree upon the wording of the Joint Venture Agreement, or
- d) The Contract being awarded to a third party, or
- f) The conclusion of the Joint Venture Agreement as per Clause 4 hereof...."
Unilateral OR Bilateral (Symmetrical Asymmetrical)
- Unilateral: [example is modified]
2
Outline
- Termination Clause
◼ Review
◼ Applicable laws
◼ Terminology and heading
◼ Location in contract
◼ Relationship of the clause to other contracts
◼ Unilateral/and bilateral (symmetrical or asymmetrical)
◼ Categories
◼ Consequences.
- Post-Contractual Obligations
- Review of examples
Termination Clause
- Termination clauses set out the express grounds upon which a contract may be brought to an
end. They're also known as "break clauses" in some circles. In the business environment,
termination clauses specify rights to bring a contract to an end for specified reasons.
- “In the event of the Employer:
- (a) failing to pay to the Contractor the amount due under any certificate of the Engineer
within 28 days after the expiry of the time stated in Sub-Clause 60.10 within which payment
is to be made, subject to any deduction that the Employer is entitled to make under the
Contract, or
- (b) interfering with or obstructing or refusing any required approval to the issue of any such
certificate, or
- (c) becoming bankrupt or, being a company, going into liquidation, other than for the purpose
of a scheme of reconstruction or amalgamation, or
- (d) giving notice to the Contractor that for unforeseen reasons, due to economic dislocation, it
is impossible for him to continue to meet his contractual obligations the Contractor shall be
entitled to terminate his employment under the Contract by giving notice to the Employer,
with a copy to the Engineer. Such termination shall take effect 14 days after the giving of the
notice.”
- The Red Book, FIDIC, Lausanne, 4th ed, 1989
Termination Clause – Application Laws:
1
, Termination clause; and post contractual obligations
- National law
◼ Deals with the termination of contractual obligation
- Uniform laws
- Mandatory rules
◼ Such as protection of consumer
➢ Precedent:
◼ At termination, the commercial agent is, as a matter of principle, entitled to an indemnity
or compensation. Case Conseils et mise en relations (CMR) SARL, ECJ decision of
19 April 2018, C-645/16
◼ What is a commercial agent? The Regulations define a commercial agent as a "self-
employed intermediary who has continuing authority to negotiate the sale or purchase of
goods on behalf of their principal or to negotiate and conclude such transactions on behalf
of and in the name of that principal"
Termination Clause – Terminology and Headings
- No universal terminology
- Headings
◼ Termination
◼ Postponement and Termination
◼ Termination and Cancellation
◼ Default
◼ Default and Liquidation
◼ Reciliation
◼ Interruption of the Loan-Events of Default
Relation to the other contracts:
- Group of Contracts:
- "The Pre-Bid Agreement shall terminate on any of the following occurrences:
- b) Failure of the Parties to agree upon the wording of the Joint Venture Agreement, or
- d) The Contract being awarded to a third party, or
- f) The conclusion of the Joint Venture Agreement as per Clause 4 hereof...."
Unilateral OR Bilateral (Symmetrical Asymmetrical)
- Unilateral: [example is modified]
2
