Definitions[]
Contract law[]
Termination occurs when either party exercises its power under the agreement or as provided by law to end a contract. Contracts may be terminated either for convenience or for cause.
Uniform Commercial Code[]
Under Section 2-106(3) of the Uniform Commercial Code (U.C.C.),
“ | termination occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives. | ” |
Issues to be considered[]
When evaluating termination provisions, consumers should consider the following best practices:
- Consumers should ensure their agreement specifies that advance notice will be given for all terminations initiated by the service provider (minimum of 30 days).
- Consumers must put in place contingency plans and procedures to find a new service (or bring the service back in‐house), extract and reload their data, and switch to the new service within this time window.
- As part of the termination process, service providers should offer assistance to consumers to facilitate data extraction (e.g., clear and concise migration documentation, or assistance from a professional services department).
- The agreement should specify that all data and information belonging to the consumer will be maintained for a specific time period after transition (in case it takes some time to discover a problem with the initial extraction process), and then be completely removed immediately after.
- At the completion of the exit process, consumers should receive written confirmation from the service provider that all of the consumer's data, including analytical and statistical information derived from it, has been completely removed from the service provider's systems.
Sample clause[]
“ | Either party shall have the right to terminate this Agreement, prior to the expiration of the term (or any renewal term) hereof, upon the occurrence of any of the following events:
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Source[]
- "Issues to be considered" section: Public Cloud Service Agreements: What to Expect and What to Negotiate, at 22.