Termination for convenience

Definition

A clause letting the customer end the contract at will on short notice.

Why It Matters

A contract the customer can end whenever they like is worth its notice period, not its term, and government work carries this clause as standard. In diligence, read every large account for it before crediting the backlog: what the notice window is, whether wind-down costs get reimbursed, and whether the clause runs one way. A pipeline of multi-year agreements terminable on thirty days' notice is a pipeline of thirty-day agreements wearing long contracts, and the price should say so.

In numbers: A $250,000-a-year contract terminable for convenience on 30 days' notice commits about $20,800, one month, and the rest is a relationship you are underwriting on faith.