I’m no fan of saying in a contract that certain provisions survive termination. See MSCD 13.642 and this 2006 post. Heck, even the Delaware Chancery Court noticed that.
But if simple survival isn’t enough, you can layer futility upon futility. At the suggestion of a reader, I dug up the following:
Those provisions that by their nature are intended to survive termination or expiration of this Agreement shall so survive.
OK, so something survives if the parties intended it to survive! An intention doesn’t have to be made explicit in a contract. Instead, it can be gleaned from the context. It follows that you could get into a fight over whether the parties in fact intended for something to survive.
The phrase intended to survive termination occurs in all sorts of formulations:
Upon termination or expiration of this Agreement … each Party’s rights and obligations with respect to fees payable hereunder, in accordance with Section 4 of this Agreement, and such other provisions that by their nature are intended to survive termination, shall survive the termination of this Agreement.
Termination will not affect accrued rights, indemnities, existing commitments or any contractual provision intended to survive termination and will be without penalty or other additional payment.
The rights and obligations of the parties set forth in this Section 17.5 and Section 1, Section 14, Section 15.1, Section 15.3, Section 15.4, Section 16, Section 18, Section 19, Section 21 and Section 22, and any right or obligation of the parties in this Agreement which, by its express terms or nature and context is intended to survive termination or expiration of this Agreement, will survive any such termination or expiration.
(By the way, if you’re wondering about termination versus expiration, see this 2012 post.)
Ken:
Suppose an agreement has an express indemnity, and does not have a survival provision. Do you see that as being part of how the claim is made, or do you see that as a separate express promise?
Chris
I assume that the “that” in your second sentence refers to a survival provision. The answer is, I’m not sure I see the point of your question. All I’d ask is, What category of contract language is it? Beyond that, it says what it says.
Hi Chris, I’d say that without an express survival provision the indemnity expires when the contract expires. To wit: I sell you a software solution. I promise to indemnify you for any claims made against you for violations of IP. If it is a 3 year agreement and there’s a claim in Year 1, I’d have to indemnify you. If the claim is made in Year 4, without the survival clause, my obligation to indemnify you expires when the contract ends.
Gord Pennell’s comments in the linked 2012 post are apt. A contract often sets up lots of duties with varying terms (eg post-employment confidentiality or noncompetition duty vs. duties during period of employment). The drafter either deals with the variances or doesn’t. Saying ‘the ones survive that are obviously meant to survive’ is a double drafting default: (1) it leaves unspecified which ones survive, and (2) it may leave unclear what termination even means, if some duties cease at ‘termination’ and others don’t.
I guess the conscientious drafter looks at every sentence that uses language of obligation and asks, ‘When does this duty end?’ and verifies that the answer in each case is acceptably clear, either because it’s specified or it’s obvious, as where performance discharges the duty.
nice breakdown.
🖤💀👌
I had a mentor once that concentrated on assigning time limits to rights and obligations and avoided terminating the agreement whenever he could. He argued that if the survival rules are in an agreement that is terminated, the survival rules can’t apply. Thoughts?
(he certainly shared your view about the importance of setting time limits and being explicit about them; I’m skeptical whether anyone cares about his survival argument, though).