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A termination clause (also known as a cancellation or termination clause) makes it possible to withdraw from a contract prematurely, under pre-agreed conditions (when, how, and against any compensation). Without such a clause, you usually cannot simply terminate an agreement—although exceptions apply, such as the right of withdrawal and contracts for an indefinite period. Please note: even with a termination clause, the principles of reasonableness and fairness may prevent reliance on it.
The termination clause allows for early termination, with conditions regarding, among other things, when and how termination is permitted and whether a termination fee applies. It is often included in the general terms and conditions and is valid in principle — freedom of contract is a cornerstone of our contract law.
Sometimes cancel without an appointment
In principle, you cannot simply terminate an agreement without a termination clause: if you purchase a product, you cannot withdraw without such a clause. There are exceptions, such as the right of withdrawal for online purchases, and special rules for employment contracts and lease agreements.
In the case of -term agreements for an indefinite period, you can generally terminate the contract, even without an agreement — but subject to the principles of reasonableness and fairness: a sufficiently long notice period, and sometimes even a compelling interest. This creates uncertainty, so a termination clause in advance is wiser.
Reasonable and fair application
Even with a termination clause, reasonableness and fairness can throw a spanner in the works, as a case from 2014 (ECLI:NL:GHSHE:2014:5182) demonstrated. An agreement for search engine marketing ran for one year and was to be tacitly renewed for another yearunless terminated at least three months before the end. The client (a sole proprietorship) ceased operations and gave two instead of three months' notice. The marketing company did not accept this, continued to invoice, and claimed nearly 2,500 euros.
Although the termination was not timely, the court ruled that the marketing company could not rely on the termination clause, because that was unacceptable according to standards of reasonableness and fairness. Consequently, it did not receive the compensation. Even with a termination clause, you must remain reasonable.
Frequently Asked Questions
Can I cancel a contract at any time?
No. Without a termination clause, usually not, except for exceptions such as the right of withdrawal or a continuous contract for an indefinite period (with a reasonable notice period).
Is a termination clause always valid?
In principle yes, thanks to freedom of contract. However, reasonableness and fairness may render invoking them unacceptable in specific cases.
Is a late cancellation automatically invalid?
Not necessarily. Sometimes, giving notice that is just slightly too late is effective after all, if adhering to the clause would be unreasonable. Therefore, try to reach an agreement together.
Have a termination clause drafted or reviewed
The legal experts at MKB Juristen draft watertight termination clauses or assess whether a termination will hold up. View our expertise in contract law or schedule an intake meeting .
