The clause you never expect to use is the one that decides what a contract is actually worth.
Termination is the part of a commercial agreement that gets the least attention at signature and the most attention afterwards. When a deal is being done, everyone is focused on price, scope and delivery dates. The exit provisions get skimmed, because nobody signs a contract expecting it to go wrong.
Yet when a relationship does break down, the termination clause determines almost everything that matters: whether you can get out at all, how quickly, what it costs, and what you are left holding. Subject to limited statutory and common law controls, the courts of England and Wales will generally hold commercial parties to the bargain they made, even where the result is uncomfortable – so the protection needs to be built in at the drafting stage rather than argued for later.
Here are ten checks worth making before you sign a business-to-business agreement.
1. Whether you have a right to terminate at all – and whether it is mutual
Start with the obvious question, because it is often answered badly. Some contracts give the supplier a broad right to walk away and the customer almost none. Others are silent on termination for a fixed term, which can leave you locked in for years. Read the rights side by side and consider whether the balance reflects the commercial reality of who is depending on whom.
2. Termination for convenience – theirs as well as yours
A right to terminate on notice without giving a reason is valuable – and uncomfortable when the other side has it. If your business will invest in people, equipment or integration work to service the contract, a counterparty who can exit on 30 days’ notice has given you very little security. Where that right cannot be removed, businesses commonly look instead for a longer notice period, a minimum initial term, or compensation for stranded costs.
3. What “material breach” actually means in your contract
“Material breach” is among the most common triggers in commercial agreements and one of the least precise. Left undefined, it becomes a judgment call – and often a dispute. If particular failures matter to you, it is generally better to say so expressly: missing a service level twice in a quarter, failing to maintain insurance, a personal data breach, missing a critical milestone. If you are the party more likely to be on the receiving end, the opposite applies, and objective thresholds are worth negotiating for.
4. Cure periods, and whether the breach can be cured at all
Most clauses give a defaulting party a period to put things right. Three points are worth checking: how long the period is, what starts the clock, and whether serious breaches are carved out of it. In Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206 (Court of Appeal, September 2025) the court confirmed that whether a breach is “capable of remedy” under a contractual cure provision is a practical question – can the mischief be redressed and matters put right for the future – and that common law rules about repudiation have no place in that analysis. A breach serious enough to be repudiatory may still be remediable under the clause.
5. The notice mechanics – the detail that most often defeats a termination
Notice provisions typically specify who may give notice, to whom, at what address, by what method, and when service is deemed effective. Some also require the notice to state the grounds relied on. A party with a strong right to terminate can still fail because it emailed a notice where the contract required delivery by hand, or served the wrong entity in a group. There is a further risk: a purported termination that turns out not to have been justified can itself be treated as a repudiation, allowing the other side to accept it and claim damages. That is not automatic – a party that genuinely and reasonably believed it was entitled to terminate is usually treated as mistaken rather than as refusing to perform – but it is a real exposure. The notices clause and the termination clause only work together, so they should be read together.
6. The renewal window
Automatic renewal provisions are among the more expensive traps in commercial contracting. An agreement that renews for a further 12 months unless notice is given not less than three months before the anniversary will roll over quietly if nobody is watching. The deadline is worth diarising at signature, and worth putting in the hands of someone who will still be there.
7. Insolvency triggers, and the statutory limits on them
Insolvency-related termination rights remain standard, but they no longer work as they once did. Under section 233B of the Insolvency Act 1986, inserted by the Corporate Insolvency and Governance Act 2020, a supplier of goods or services generally cannot terminate a contract – or do any other thing under it – by reason of the customer entering a relevant insolvency procedure, and cannot exercise a pre-insolvency right to terminate during the insolvency period, unless the office-holder or the company consents or the court gives permission on the ground that continuing would cause the supplier hardship. Certain contracts and entities are excluded. Importantly, the section does not stop a supplier terminating for a fresh breach occurring after the insolvency, such as non-payment for post-insolvency supplies.
8. Which right you are exercising: contractual or common law
Where a breach is serious, there may be two routes out – the contractual termination provision, or acceptance of a repudiatory breach at common law. They are not interchangeable, and the risk runs in both directions. Terminating under the clause may confine you to the remedies the clause provides; conversely, in The Winros Partnership v Global Energy Horizons Corporation [2026] EWCA Civ 654 (Court of Appeal, May 2026) a party that accepted a repudiatory breach instead of invoking the relevant contractual clause was unable to recover, on a restitutionary basis, sums that clause would have produced – the Court of Appeal holding that unjust enrichment cannot displace the risk allocation the parties expressly agreed. Two points follow. First, check whether the contract preserves common law rights, as many do with wording such as “without prejudice to any other rights”. Second, the Court of Appeal has confirmed that a contractual termination right is not waived unless the party actually knew both of the facts giving rise to it and of the right itself (URE Energy Ltd v Notting Hill Genesis [2025] EWCA Civ 1407), though turning a blind eye will not help, and continued performance may still found an estoppel. Taking advice before a notice goes out is generally time and money well spent.
9. What you get paid on termination – and the clause that caps it
Termination and money sit in different parts of most agreements and need to be read together. A compensation-on-termination provision may entitle you to costs, committed spend, or the profit you would have made; equally it may entitle you to very little. How far such wording reaches is a question of construction: in Great Asia Maritime Ltd v Orion Shipping and Trading LLC [2026] UKSC 23 (Supreme Court, July 2026) the Supreme Court held that a cancellation clause in a standard-form ship sale contract, which referred simply to “loss”, was wide enough to cover loss of bargain where the seller’s failure was negligent – and without the buyer having to establish a repudiatory breach. Then read the limitation of liability clause, which will often exclude loss of profit and cap recovery, and may reduce the termination remedy you thought you had negotiated to a fraction of the actual loss.
10. What happens the day after
Termination is a process, not an event. Work through the practicalities: who returns the data, and in what format; whether licences you depend on survive; whether the supplier must give transition assistance, and for how long; what happens to work in progress, tooling, stock and prepayments; which obligations survive, such as confidentiality and audit rights; and whether any minimum-commitment shortfall or volume discount becomes repayable. A contract that is easy to exit on paper but leaves you unable to operate for six months has not protected you.
This article is general information about business-to-business contracts governed by the law of England and Wales, as at August 2026. It does not address consumer, employment or regulated financial services contracts. It is not legal advice, no solicitor and client relationship arises from reading it, and it should not be relied upon: contracts turn on their own wording and on the circumstances of the parties, and the law may have changed since the date given. Please take advice on your own position before signing a contract or serving a termination notice.
Considering a new agreement, or thinking about bringing one to an end? Our commercial team advises businesses on contract terms and on the practical questions that arise on exit. Please get in touch to discuss your situation.