The Procurement Glossary » Termination for Cause
Termination for Cause
Contracts & Legal
Definition
Ending a contract because the other party has materially breached it, usually after a chance to remedy the breach.
Explanation
Termination for cause is the buyer's ultimate sanction for serious non-performance. Contracts specify what counts as cause, the cure period, and the consequences, so exit is orderly and defensible rather than disputed.
Example
After the supplier fails to cure repeated quality failures within 30 days, the buyer terminates for cause.
Related terms
- Breach of Contract — A failure by one party to perform an obligation under a contract without a lawful excuse.
- Termination for Convenience — A contractual right to end an agreement without the other party being at fault, usually with notice and sometimes a fee.
- Exit Plan — A pre-agreed plan for winding down a supplier relationship smoothly, covering handover, data and continuity of supply.
- Contract — A legally binding agreement between buyer and supplier setting out what will be supplied, at what price and on what terms.
Frequently Asked Questions
What is Termination for Cause?
Ending a contract because the other party has materially breached it, usually after a chance to remedy the breach. Termination for cause is the buyer's ultimate sanction for serious non-performance. Contracts specify what counts as cause, the cure period, and the consequences, so exit is orderly and defensible rather than disputed.
Can you give an example of Termination for Cause?
After the supplier fails to cure repeated quality failures within 30 days, the buyer terminates for cause.
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