Matthew Hattersley
Matthew Hattersley, Partner, leads Clarion's Commercial team. Matthew advises on all aspects of commercial law including IT contracts, outsourcing and general business contracts. Matthew also heads up Clarion's growing renewables and energy sector.
Practice Area
Panel
- Consulting Editorial Board
2 Contributions by Matthew Hattersley
PRACTICE NOTES
Term, renewal and termination in B2B commercial contracts: drafting strategies, common law and statutory constraints, triggers, consequences and post-termination obligations
Term and termination
This Practice Note outlines a range of approaches to drafting term and termination clauses in commercial contracts for business-to-business (B2B) dealings. It explores how express contractual provisions align with common law rights concerning the length and ending of contracts, offers practical guidance on preparing term and termination clauses, and highlights the principal issues to address in negotiations. Where an agreement is silent on duration or ending, if a dispute arises, the courts will apply common law principles to discern the parties’ intentions. To reduce uncertainty, it is typical to include express clauses that set out the duration and termination of a contract. As a rule, contractual rights to terminate are additional to, and not a replacement for, common law rights. This Practice Note concentrates on contractual terms dealing with duration and termination in a general commercial context, why they warrant careful consideration, and how they may interact with common law principles. Practitioners should ensure a clear understanding of the relevant common law principles and draft with care to avoid ambiguity and unintended effects arising from imprecise drafting and inconsistent interpretation in court. In this Practice Note, references to ‘term’ are generally intended to denote the overall contractual duration of the...
Commercial
CHECKLISTS
Commercial contracts under English law: drafting and negotiating term and termination clauses—practitioners' checklist of triggers, renewals, insolvency, termination payments, force majeure, service levels, consequences and post-termination obligations
This Checklist outlines the principal points to weigh up when drafting term and termination provisions in a commercial contract for use by the parties. For additional guidance on the duration and ending of commercial contracts generally, in practice, see:
Practice Note: Drafting term and termination clauses—commercial contracts and
Contract termination—overview
General drafting points
The common law has developed a series of principles concerning contract length and termination. For instance, where a contract says nothing about duration, a court may imply a right to end it on reasonable notice. In some situations, parties may also end a contract for repudiatory breach. Nevertheless, it is usually better to set out express terms on duration and termination to give the parties certainty, rather than depending on common law. If a contract lacks express termination rights, it may be uncertain whether a given breach allows the innocent party to bring the agreement to an end. A termination clause enables the parties to customise termination to their specific deal as appropriate and can set out a clear process to follow if a termination right arises. As a general rule, contractual rights to terminate operate in addition to, and not as a replacement for,...
Commercial
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