How to Express Termination with Prior Notice

Consider this (emphasis added), recovered from the EDGAR tar pits:

If … , Ultimus may terminate this Agreement upon 60 days’ prior written notice [to the Trust].

Although that formulation is standard, I suggest it doesn’t make sense. In that case, termination wouldn’t happen when Ultimus—let’s take a moment to appreciate that name—notifies whomever it is. Instead, it would happen 60 days later.

So how about saying instead the following:

If … , Ultimus may terminate this agreement with 60 days’ prior notice [to the Trust].

If … , Ultimus may terminate this agreement by giving 60 days’ prior notice [to the Trust].

Both with and by giving are better than upon, in that neither explicitly connotes timing. Nevertheless, they’re not ideal. If I say that you may achieve X by doing Y, the implication is that X is achieved the moment you do Y. Seeking to negate that by referring to prior notice is awkward.

Here’s how to be explicit about it:

If … and Ultimus notifies the Trust that Ultimus wishes to terminate this agreement in accordance with this section 8.3, this agreement will terminate at midnight at the end of the 60th day after the day the Trust receives that notice.

Note my use of wishes, to make it clear that giving notice doesn’t immediately result in termination.

Here’s another example from the same contract, with underneath it my version reflecting my explicit approach:

A party may terminate this Agreement at the end of the Initial Term or a Renewal Term by providing written notice of termination to the other party at least 90 days prior to the end of the Initial Term or then-current Renewal Term.

If at least 90 days before the end of the Initial Term or then-current Renewal Term a party notifies the other party that it wishes to terminate this agreement in accordance with this section 8.2, this agreement will terminate at the end of the Initial Term or then-current Renewal Term, as applicable.

As is so often the case, this boils down to choosing which category of contract language to use:

  • language of discretion
  • language of policy plus a conditional clause

What do you think?

As for why I didn’t say terminate automatically in my explicit versions, see MSCD 13.64.

 

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.