Early termination right

An early termination right clause allows one or both parties to terminate the contract before the agreed end date under specified conditions, often involving notice periods and sometimes fees or penalties. This clause provides flexibility to adapt to changing circumstances but can also introduce uncertainty regarding the contract's duration.

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8 Early termination right examples

  • Description
    Landlord’s Early Termination Rights. Landlord is hereby granted rights to terminate the Lease with respect to all, but not less than all, of one or more of full floors 31 through 35, 41 and 42 of the Premises (each, an “Early Termination Right” and collectively, the “Early Termination Rights”) effective as of a termination date selected by Landlord for each Early Termination Right exercised by Landlord (each, an “Effective Termination Date”), which Effective Termination Date shall not be earlier than January 1, 2024 nor later than December 31, 2024, time being of the essence. The Early Termination Rights may be exercised separately or in combination with each other, and in one or multiple exercises. Any portion of the Premises as to which Landlord exercises an Early Termination Right is sometimes referred to herein as an “Early Termination Space”.
  • Description
    Early Termination Right. The Lease is further amended by inserting the following as Article 28: “ARTICLE 28. EARLY TERMINATION
  • Description
    In addition, the Amendment provides that upon exercise of the early termination right by the Company, the applicable early termination payments will be made within 5 business days following the Company’s delivery of notice of such exercise and a schedule containing the amount of the early termination payments. Prior to the Amendment, the TRA included certain procedures that were required to be followed and that would have resulted in a longer time period for payment.
  • Description
    Subject to the terms of this Waiver, as of the Effective Date, APO Corp. hereby permanently and irrevocably waives the Early Termination Right.
  • Description
    Sublessee's Early Termination Right. Sublessee shall have the one-time right (the "Early Termination Right"), but not the obligation, to terminate the Sublease effective as of the completion of the thirty-seventh (37th) full calendar month of the Sublease Term (the "Early Termination Date"), provided that the following conditions shall be satisfied: (a) Sublessee shall not be in default under the Sublease as of the time of exercise of its Early Termination Right nor at any time thereafter; (b) Sublessee shall give Sublessor nine (9) months prior written notice of the exercise of its Early Termination Right (the "Termination Notice"); (c) Sublessee shall pay Sublessor six (6) months Gross Rent at the time of the Termination Notice; and (d) Sublessee shall be responsible for the payment of Gross Rent and all other charges due under this Sublease through and inclusive of the Early Termination Date.
  • Description
    Amendment to Section 39 (Early Termination Right). Section 39 of the Lease shall be deleted in its entirety and replaced with the following: “Early Termination Right. Tenant shall have the right, subject to the provisions of this Section 39, to terminate this Lease (“Termination Right”) with respect to the entire Premises only as of July 31, 2021 (“Early Termination Date”), so long as Tenant delivers to Landlord a written notice (“Termination Notice”), of its election to exercise its Termination Right no less than 12 months in advance of the Early Termination Date. If Tenant timely and properly exercises the Termination Right, Tenant shall vacate the Premises and deliver possession thereof to Landlord in the condition required by the terms of this Lease on or before the Early Termination Date and Tenant shall have no further obligations under this Lease except for those accruing prior to the Early Termination Date and those which, pursuant to the terms of this Lease, survive the expiration or early termination of this Lease. If Tenant does not deliver to Landlord the Termination Notice within the time period provided in this paragraph, Tenant shall be deemed to have waived its Termination Right and the provisions of this Section 39 shall have no further force or effect.”
  • Description
    If either EPC LLC or Cremo exercises the Early Termination Right, the terminating party must pay the non-terminating party a termination fee of $1,500,000.
  • Description
    Tenant's Early Termination Right. The Lease shall be amended by inserting the following in addition to all other provisions: "TENANT'S EARLY TERMINATION RIGHT: a.) Termination Option. Subject to and contingent upon (i) the satisfaction of all conditions precedent contained herein, and (ii) the payment of the Termination Fee (as defined hereinafter in subparagraph b.), Tenant shall have one (1) option to terminate this Lease ("Termination Option") effective on December 31, 2018 ("Effective Date of Termination") on the terms and conditions set forth herein. b.) Definitions. The term "Termination Fee" shall mean an amount equal to eight thousand five hundred and sixty one dollars and seventy five cents ($8,561.75) per month, as prorated for less than a full calendar month, payable by Tenant to Landlord in accordance with the terms and conditions of this Lease applicable to the payment of Base Rent, beginning on the date on which Landlord receives the Tenant's Termination Notice (as defined hereinafter in subparagraph d.) and ending on the Effective Date of Termination. c.) Conditions Precedent. Tenant's Termination Option shall be conditioned on and subject to the satisfaction of the following conditions precedent on or prior to the Effective Date of Termination: (i) Tenant shall not be in default of its obligations under this Lease, and no event shall have occurred which with the lapse of time shall be a default if not cured, (ii) the Lease or Tenant' s right to possession of the Premises has not been terminated, (iii) Tenant has not transferred any of its interest in this Lease or any portion of the Premises to any person or entity, wherein, for the avoidance of doubt, a sublease of the Premises shall not constitute a transfer provided that Tenant does not transfer its Termination Option to any sub-lessee, (iv) Tenant has provided the Landlord with the "Termination Notice" (as defined hereinafter in subparagraph d.) in a timely fashion, time being of the essence (v) Tenant shall have paid all Base Rent and all other amounts owing under this Lease through the Effective Date of Termination, (vi) Tenant shall have paid to Landlord the Termination Fee, and (vii) Tenant shall have vacated and returned the Premises to Landlord in the condition required under this Lease as of the Effective Date of Termination. In the event that any of these conditions precedent shall not be satisfied when required, time being of the essence, Tenant shall not have the right to terminate this Lease and any Termination Notice issued by Tenant prior thereto shall be without force or effect. d.) Exercise of Termination Option. Tenant may exercise its Termination Option upon written notice ("Termination Notice") delivered to Landlord no later than March 31, 2018, time being of the essence with regard to the delivery of such Termination Notice. If Tenant fails or refuses to (i) pay to Landlord the Termination Fee as and when required, or (ii) satisfy all conditions precedent, Tenant shall not have the right to terminate this Lease as of the applicable Effective Date of Termination, and any Termination Notice issued by Tenant prior thereto shall be without force or effect. Subject to the foregoing, on the Effective Date of Termination of this Lease, Landlord and Tenant agree that this Lease shall be terminated and rendered null and void and Tenant shall return the Premises to Landlord in accordance with the terms and conditions specified in this Lease. Neither Landlord nor Tenant shall be responsible for their respective duties and obligations under the Lease occurring after termination, except for those duties and obligations specifically identified as surviving termination.

What is an Early Termination Right?

An Early Termination Right is a contractual provision allowing one or both parties to end a contract before its scheduled completion date. This provision often includes the circumstances under which a party can terminate the agreement and any associated penalties or conditions. It serves as a mechanism to provide flexibility when unforeseen circumstances make continuing the contract impractical or undesirable.

When should I use an Early Termination Right?

You should consider using an Early Termination Right in several situations:

  • Uncertainty: When entering contracts where there is potential for significant changes in circumstances.
  • Long-term Contracts: For long-duration engagements where market conditions or business needs might change.
  • High-risk Agreements: Where external factors could drastically impact the performance of the contract.

Including such a provision provides an escape route, mitigating potential losses or issues.

How do I write an Early Termination Right?

Writing an Early Termination Right involves specifying the conditions under which termination is permitted, any notice requirements, and potential penalties or fees. Here is a simple structure:

  1. Conditions for Termination: Clearly outline what circumstances justify termination.
  2. Notice Requirements: Detail how and when notice should be given to the other party.
  3. Consequences of Termination: Include any fees, penalties, or obligations both parties may have upon termination.

Example:

“Either party may terminate this Agreement upon 30 days written notice in the event that the other party fails to comply with any of its obligations under this Agreement and such failure is not corrected within 15 days following written notification thereof.”

Which contracts typically contain an Early Termination Right?

Contracts that typically contain an Early Termination Right include:

  • Service Agreements: Where canceling might become necessary due to performance issues or changes in business strategy.
  • Lease Contracts: Allowing termination in case of changes in tenant needs or property conditions.
  • Employment Contracts: To end employment due to unpredictable business conditions or performance concerns.
  • Supply Agreements: Where market conditions might change affecting supply chain dynamics.

Including this provision ensures both parties have a clear understanding and legal pathway to terminate the contract amicably under specified conditions.

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Early termination

The early termination clause outlines the conditions under which a contract can be ended before its agreed-upon expiry date, including any required notice periods and potential penalties or fees. This clause provides parties with a legal framework to exit the contract, ensuring clarity and protecting both parties' interests in unforeseen circumstances.

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