During a CLE session at the recent Associate of Corporate Counsel annual meeting, one of the panel members used the phrase termination for convenience. It’s a phrase I don’t encounter too often, so I thought I’d better look into it.
The Implications of “Termination for Convenience”
A quick review of contracts on the SEC’s EDGAR system shows that the phrase termination for convenience occurs in a variety of different kinds of agreements providing for ongoing peformance. Here’s an example from a services agreement:
6.2 . T-Mobile may terminate this Agreement, the Services performed at any Site or any one or more Statements of Work hereunder for convenience by giving at least ninety (90) days’ prior written notice to the Provider. However, unless otherwise provided under this Agreement, T-Mobile will not exercise its termination for convenience rights for the Agreement during the first year following the Effective Date.
Termination for convenience would seem to be a euphemism for termination for any reason at all. I suspect that the phrase has come into use simply because it sounds less threatening than termination for any reason and rolls off the tongue more readily.
You can see this in the way some drafters use it as a catchy section heading but lay out the harsh reality in the body of the section:
SECTION 7.01. . Either party may terminate this Agreement, for any reason or for no reason, upon not less than 45 days prior written notice to the other party delivered in accordance with Section 11.01 stating such party’s intention to terminate this Agreement.
I’m against anything that muddies the meaning of contract language. Acme might want to terminate its agreement with Widgetco for any number of reasons. Maybe it found it could get better terms elsewhere. Maybe it decided to stop selling widgets. Maybe it became embroiled in litigation with Widgetco. “Convenience” seems a pallid word to capture all those possible reasons.
And more to the point, an imaginative (or desperate) litigator might argue that Acme could terminate for convenience only if its agreement with Widgetco imposed some sort of burden, and that the prospect of a better deal elsewhere wasn’t a sufficient reason.
So I don’t think I’ll be using termination for convenience. For what it’s worth, my highly unscientific survey of contracts filed on EDGAR in the past month suggests that contracts containing termination [or terminate] for any reason outnumber by twenty to one those that contain termination [or terminate] for convenience.
If termination for convenience isn’t your cup of tea, what should you use instead? Here’s the full range of language you could use:
Acme may terminate this agreement [at any time] [for any reason] [or for no reason] by giving the Vendor at least 30 days’ prior notice.
What about the first two bracketed elements? If you say that Acme may terminate at any time, that carries with it the implication that Acme may terminate for any reason. If you say that Acme may terminate for any reason, that carries with it the implication that Acme may terminate at any time. Is the implication strong enough that you can use one of these two elements and not the other? What about dispensing with both of them?
My vote goes to keeping for any reason, as that’s the most important concept. I think the associated implication that Acme may terminate whenever it wants is sufficiently strong to allow one to dispense with at any time. And I wouldn’t want to dispense with both elements, even though I could happily make the argument that if a provision doesn’t impose any limitations on reasons for termination, I wouldn’t need any reason. Three extra words is a small price to pay for being categorical.
But if you’re drafting an agreement that provides for termination for cause (a topic worth a post unto itself), instead of termination for any reason you could use termination without cause, in the interest of symmetry.
The one element I wouldn’t have any qualms about eliminating is or for no reason. Businesses act rationally or irrationally, prudently or imprudently, competently or incompetently. What they don’t do is act entirely at random.)
But what about a section heading? “Termination for Any Reason” does seem a little in-your-face. Here’s my suggestion—cue trumpet fanfare—”Unrestricted Termination.”
So to sum up, here’s what I’d use:
. Acme may terminate this agreement for any reason by giving the Vendor at least 30 days’ prior notice.
Hey, what about the word prior? For more on that, see this June 2006 post. And while I’m at it, don’t forget at least.
All this represents my first take on this subject, so I’d be interested to hear what you think.