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Termination for cause

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Definition Edit

Termination for cause (also called termination for default (TFD)) is a contract provision that permits a party completely or partially to terminate performance of the contract for material breach or other stated causes.

When there is a "for cause" event, the contract usually requires that the party give the other party notice that adequately identifies the reasons for the alleged "for cause" event, and provides a period of time for the other party to cure the problem(s). Only if that party fails to rectify the problem(s) within the prescribed cure period does the affected party have the right to terminate the agreement.

Sample clause Edit

Customer may terminate the whole or any part of this Agreement, by written notice of default to Vendor, in any one of the following circumstances:
(a) if Vendor fails to perform any duties or obligations within the time specified herein or any written extension thereof granted by Customer;
(b) if Vendor so fails to make progress as to endanger performance of this Agreement in accordance with its terms;
(c) if Vendor fails to comply with any of the material terms and conditions of this Agreement. Such termination shall become effective if Vendor does not cure such failure within a period of ten (10) days after written notice of default by Customer;
(d) If the other party is declared insolvent or bankrupt, or makes an assignment for the benefit of creditors, or a receiver is appointed or any proceeding is demanded by, for or against the other under any provision of the Federal Bankruptcy Act or any amendment thereof.

Upon termination, Customer may procure, upon such terms as it shall deem appropriate, services similar to those so terminated. Vendor shall continue performance of this Agreement to the extent not terminated.

See also Edit

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