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.
8 thoughts on “How to Express Termination with Prior Notice”
Substituting something for “upon” in the termination phrasing makes sense (but what’s wrong with “giving” instead of “providing”? and in that formulation, the “by” seems a pretty clear indication of mechanics). However, since most contracts will have a notice provision that indicates when a notice is deemed effective (and in this context therefore when termination is effective), having a separate statement in the termination clause seems surplus to requirements, and, as you often say, potentially confusing.
My main point is that you’re not actually terminating by giving the notice. That happens later.
Point taken (ouch). I like Chris’s solution for indefinite contracts. For contracts with evergreen clauses, maybe shifting the order of operations would help: A party may terminate this agreement at the end of the Initial Term or the then-current Renewal Term, as the case may be, by giving notice of its intention to do so at least 60 days before the end of the term.” With this kind of contract, the termination date is always the end of the term, so the time for notice doesn’t operate as an extension of the term, it’s just a procedural step. It gets more complicated with terminations for breach or other unscheduled events.
I’ve updated my post to reflect these musings. And your giving prevails over providing!
I often do contracts with an indefinite term, so my termination provisions often read something like “This agreement begins when both parties have signed it and ends 60 days after either party gives notice of its termination.”
Sure, that’s consistent with my explicit approach, although I’d get rid of your abstract nouns in favor of notifies the other that it is terminating this agreement.
Indefinite term version:
If…, Ultimus may terminate this agreement by giving the Trust at least 60 days’ prior notice of termination.
Definite term version:
This agreement will terminate at the end of the Initial Term or Renewal Term if either party gives the other notice of termination not less than 90 days before the end of the applicable term.
Any reference to ‘wishes’ seems like a needless detour, as this substitution shows:
If at least 90 days before the end of the Initial Term or then-current Renewal Term a party notifies the other party that *vests have no sleeves,* this agreement will terminate at the end of the Initial Term or then-current Renewal Term, as applicable.
If the 60th day is April 30th and the notice is sent registered mail on Mar 2nd and received on Mar 3 is it legally within the 60 days notice period? The contract language is “by giving written notice to the other at least 60 day prior to the expiration of the initial term”