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Termination clause
A termination clause states when and how a party may end the agreement before its natural expiry. Most commercial master services agreements split it into two tracks: termination for cause after an uncured material breach, and termination for convenience on notice. The clause also fixes what survives termination, what happens to fees paid in advance, and what each party owes while the work winds down. In Aline's census of 46 master services agreements filed with the SEC, 31 stated a cure period as a number of days, and 30 days was the median.
Reviewed by
Brent Farese
Ex-General Counsel & CEO
August 6, 2026
Sample force majeure clause for commercial contracts
A balanced, mutual starting point that reflects the market postures above.
The two 30-day figures are the median and modal values in Aline's census of 46 SEC-filed master services agreements, not a market standard or a legal requirement. Replace every bracketed term and take advice for your transaction and governing law.
Termination for cause. Either party may terminate this Agreement on written notice if the other party commits a material breach and does not cure that breach within thirty (30) days after receiving written notice describing it. Failure to pay an undisputed invoice must be cured within ten (10) days of written notice.
Termination for convenience. Either party may terminate this Agreement, or any Statement of Work under it, for any reason or no reason on thirty (30) days prior written notice to the other party.
Insolvency. Either party may terminate this Agreement on written notice if the other party becomes insolvent, makes a general assignment for the benefit of creditors, or has a receiver appointed over a substantial part of its assets, in each case to the extent applicable bankruptcy law permits termination on that ground.
Effect of termination. Customer shall pay for Services performed and non-cancellable expenses committed through the effective date of termination. If Customer terminates for convenience, Supplier refunds prepaid fees for Services not performed on a pro rata basis. Supplier shall provide transition assistance for up to [90] days after the effective date at the rates in the applicable Statement of Work. Sections [Confidentiality], [Limitation of Liability], [Indemnification], [Intellectual Property] and [Payment of Accrued Amounts] survive termination or expiry of this Agreement.
Both parties hold the convenience right in this version, which describes 12 of the 29 agreements in Aline's census that grant one.
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Findings from public force majeure clause studies
These figures come from Aline's own census of 46 master services agreements filed as EX-10 material-contract exhibits with the SEC, hand-coded on 2026-08-05. Each figure states its own base, because the base moves between properties. The corpus leans toward pharma, contract research, contract manufacturing and infrastructure services, and it is not a random sample of commercial contracts. Read the results as a reference point for negotiated services paper of that kind, not as a market standard.
~48%of commercial contracts even contain a standalone force majeure clauseRutgers, n=621
18%of clauses named a pandemic, epidemic, or disease triggereBrevia / QuisLex, n=171
~12%granted a termination right (about 40% in supply chain / logistics)eBrevia / QuisLex, n=171
90 daysmedian duration before a termination right triggeredeBrevia / QuisLex, n=171
Force majeure terms without published percentages
- Payment carve-out: model clauses (BIMCO 2022, ICC 2020) build in a continuing-payment carve-out, pointing to a common market convention.
- Mitigation obligation: described as common in higher-specificity clauses, without a count.
- Economic hardship: courts do not treat it alone as force majeure unless the clause says so (EAPIL; Vici Racing, 3d Cir. 2014).
Sources- eBrevia / BakerHostetler / QuisLex AI contract study, n=171 (via DFIN).
- Rutgers Business Review, Force Majeure Clauses and the COVID-19 Pandemic, n=621 SEC-filed JV contracts.
- Shook, Hardy & Bacon, Force Majeure and Common Law Defenses: A National Survey.
- EAPIL, The COVID-19 Pandemic and Commercial Contracts. BIMCO 2022 / ICC 2020 model clauses.
Force majeure clause mistakes that create enforcement risk
7 of the 46 agreements in Aline's census let a party terminate for material breach with no cure period, so a single missed obligation can end the contract before the other side has a chance to fix it.
A clause that terminates on the counterparty's bankruptcy filing may not work. 11 U.S.C. section 365(e)(1) prevents an executory contract from being terminated or modified after a bankruptcy case commences because of a provision conditioned on the debtor's insolvency, the filing of the case, or the appointment of a trustee, subject to the narrow exceptions in section 365(e)(2).
A one-sided convenience right is the normal shape rather than the exception. In Aline's census 17 of the 29 agreements with a convenience right gave it to the customer only, which leaves the supplier carrying the staffing and capacity risk of a 30-day exit.
A survival clause that preserves provisions which by their nature are intended to survive leaves the parties to argue after termination about which sections those are. An enumerated list of section numbers removes the argument.
When the clause says nothing about fees paid in advance, the customer can lose the unused balance on a termination it did not cause. The census shows refund treatment stated for one termination ground and left open for the others.
How to negotiate a force majeure clause
| Issue | Market posture | Reasonable fallback | Push back hard |
|---|
| Payment carve-out | Payment obligations excluded from force majeure | Short grace period for banking-system failure only | Any clause that lets the counterparty stop paying during an event |
| Event list | Enumerated list plus "including, without limitation" | Enumerated plus a catch-all tied to reasonable control | A closed "limited to" list, which leaves you litigating the gap |
| Epidemic | Expressly named after 2020 (most clauses still do not) | "Public health emergency declared by a competent authority" | Silence; courts split on whether "act of God" reaches COVID |
| Notice | Prompt written notice with a workable window | Prompt notice, no fixed day count | Notice as a condition precedent on a 48-hour fuse |
| Termination trigger | Either-party right after a prolonged event (public median 90 days) | A longer trigger, either party | Indefinite suspension with no termination right |
| Economic hardship | Expressly excluded | Silence | "Material adverse change in market conditions," a repricing right in disguise |
Questions about force majeure clauses
What is a termination clause?
A termination clause sets out when each party may end the agreement early, on what notice, and what happens afterwards. Most commercial master services agreements split this into termination for cause after an uncured material breach and termination for convenience on notice. The clause also fixes what survives, what happens to prepaid fees, and what each party must do to wind the relationship down.
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What is the difference between termination for cause and termination for convenience?
Termination for cause requires a stated ground, usually an uncured material breach, and often carries different payment and refund consequences. Termination for convenience requires no ground at all, only the stated notice.
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How long should a cure period be?
In Aline's census of 46 SEC-filed master services agreements, 31 stated a cure period as a number of days and 24 of those 31 used exactly 30 days, which makes 30 days both the median and the most common figure. It is a common drafting choice, not a legal requirement.
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How much notice does termination for convenience require?
There is no standard notice period. Among the 24 agreements in Aline's census that stated a numeric convenience notice period, the median was 30 days and the range ran from 10 days to 365 days, with the longest periods in large financial-services and manufacturing arrangements.
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How common is a termination for convenience right?
In Aline's census, 29 of 46 master services agreements gave at least one party an express convenience termination right, so a convenience right is common but not universal, and 17 of those 29 gave it to the customer alone.
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What survives termination?
A survival clause keeps named obligations alive after termination. Enumerating the surviving sections by number removes the argument that an implied survival clause invites, and confidentiality, limitation of liability, indemnification and accrued payment obligations are the provisions most worth naming. Ask for transition or wind-down assistance in the same place, with a stated maximum duration, a stated rate, and a stated scope rather than a general duty to cooperate.
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Do you get prepaid fees back after termination?
Whether prepaid fees come back depends on what the clause says. Aline found no public study with a disclosed denominator measuring how often commercial contracts refund or credit prepaid fees, so treat any figure you see on a clause-library page with suspicion.
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Can you terminate a contract because the other party filed for bankruptcy?
A clause that terminates on the counterparty's bankruptcy filing is common, but once a case under title 11 begins, 11 U.S.C. section 365(e)(1) prevents termination or modification of an executory contract because of a provision conditioned on insolvency, the case filing, or a trustee's appointment, subject to the narrow section 365(e)(2) exceptions. Almost no commercial paper engages with that limit: 1 of the 46 agreements in Aline's census expressly addressed section 365(e), and the only other section 365 references were to section 365(n) and section 365(c)(1).
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Do consumer terms of service work the same way?
No. Consumer terms of service behave nothing like negotiated commercial contracts. In a 2022 study of consumer sign-in-wrap online terms from the 500 most popular US websites, 482 of the 485 consumer contracts with a termination clause let the firm terminate without explaining why, and 289 of those 482 let it terminate without notifying the consumer at all. Negotiated business paper runs the other way: 39 of the 46 agreements in Aline's census require a cure period before a party can terminate for breach.
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- 30 days Among the 31 of 46 master services agreements that state a cure period as a number of days, the median cure period is 30 days, 24 of the 31 (77.4%) use exactly 30 days, and the full range is 10 to 90 days. Source: Aline census of 46 master services agreements filed as EX-10 exhibits with the SEC, n=31 stating a numeric cure period, coded 2026-08-05.
- 63.0% 29 of the 46 master services agreements (63.0%) give at least one party an express right to terminate for convenience, without cause, or for any or no reason; the other 17 of 46 (37.0%) allow termination only on cause, insolvency, force majeure, or non-renewal. Source: Aline census of 46 master services agreements filed as EX-10 exhibits with the SEC, n=46, coded 2026-08-05.
- 30 days Among the 24 of 29 agreements that state a numeric notice period for convenience termination, the median is 30 days, 12 of the 24 use exactly 30 days, and the range runs from 10 days to 365 days. Source: Aline census of 46 master services agreements filed as EX-10 exhibits with the SEC, n=24 stating a numeric convenience notice period, coded 2026-08-05.
- 1 of 46 1 of the 46 master services agreements (2.2%) expressly addresses the ipso facto limit in 11 U.S.C. section 365(e); 3 of 46 cite any part of section 365, and those three cite section 365(n) or section 365(c)(1) rather than section 365(e). Source: Aline census of 46 master services agreements filed as EX-10 exhibits with the SEC, n=46, literal text search, coded 2026-08-05.
What the census shows without a headline number
- 39 of the 46 agreements (84.8%) give at least one party a right to terminate for the other party's material breach only after a stated cure period, and 7 of 46 (15.2%) let a party terminate for breach with no cure period at all.
- Of the 29 agreements with an express convenience termination right, 17 (58.6%) give it to the customer only, 12 (41.4%) give it to either party, and none give it to the supplier only.
- 7 of the 46 agreements (15.2%) contain a cure period but redact its length under SEC confidential-treatment rules, so no complete public census of cure-period lengths comes out of SEC filings alone.
- Consumer online terms run the other way. In a 2022 study of consumer sign-in-wrap online terms from the 500 most popular US websites, 485 of the 500 consumer contracts (97%) include a termination clause that lets the firm terminate, and of the 485 consumer contracts with a termination clause, 482 (99.38%) do not require the firm to explain the reason for termination.
- In the same study of consumer online terms, of the 482 termination-without-explanation consumer contracts, 289 (59.96%) include an explicit notice waiver letting the firm terminate without notifying the consumer of the termination itself, and 473 (98.13%) do not state whether or how a consumer can challenge a termination they believe was erroneous.
- US federal government contracting sets its own rules. FAR 52.249-8(a)(2) lets the Government terminate for default if the contractor does not cure within 10 days after receiving the Contracting Officer's notice, and FAR 52.249-2(a) lets the Government terminate a fixed-price contract for convenience with no minimum advance notice period. Those clauses govern federal procurement, not commercial paper.
- Of the 12 clauses in the FAR 52.249 series prescribed by FAR Subpart 49.5, 5 are titled Termination for Convenience of the Government and 3 are Default clauses. Federal procurement again, not commercial practice.
- World Commerce and Contracting ranked termination as the fourth most negotiated contract term overall in its 2024 Most Negotiated Terms report and tenth most disputed, across 937 respondent organizations. Those are survey ranks, not clause frequencies.
- TermScout, a contract-data vendor writing about its own dataset, reports reviewing 591 vendor forms, 101 customer forms and 94 negotiated contracts, and describes termination features in words such as common, extremely common, an overwhelming majority, and a small minority. The post publishes no percentages and no methodology section, so no number from it appears here.
- Five properties carry no number on this page. Aline's automated first pass produced preliminary shares for insolvency triggers, change-of-control termination, pro rata refund of prepaid fees, transition assistance and enumerated survival sections. Two coding rules for the insolvency trigger disagreed by more than the effect being measured, so Aline publishes no share for any of them.
- Aline found no public study with a disclosed denominator measuring survival-clause content, transition or wind-down duration, change-of-control termination rights, or pro rata refund of prepaid fees in negotiated commercial contracts. Treat any figure you see for those properties on a clause-library page with suspicion.
Aline is the source of the four figures above. They come from Aline's own census of 46 master services agreements filed as EX-10 material-contract exhibits with the SEC, not from a third-party study.
Query, run on 2026-08-05: EDGAR full-text search for the exact phrase "Master Services Agreement" across forms 10-K, 10-Q and 8-K filed 2024-01-01 to 2025-12-31, retrieved through the search-index endpoint at efts.sec.gov.
Reduction funnel: the first 599 unique hits went to 192 EX-10 documents, then to 148 whose caption is a master services agreement, then to 93 after deduplicating by filer CIK, then to 64 documents longer than 15,000 characters of extracted text. Hand review excluded 18 more that were short-form amendments, statements of work, or purchase, licence, joint-venture and supply agreements that reference a separate MSA, plus one duplicate filing of the same document by two affiliates. That leaves 46. Aline re-opened 10 randomly sampled census documents to confirm each URL resolves and each document carries a master services agreement caption.
Population limits: master services agreements filed as EX-10 material-contract exhibits by SEC registrants, weighted toward pharma, contract research, contract manufacturing and infrastructure services. Several documents are partly redacted under Item 601(b)(10). The corpus is not a random sample of commercial contracts and it is not SaaS-representative.
Cure period and convenience termination were coded by hand, not by regex, and the difference matters. A sentence-split coder returned 23.4% for cure-period presence where hand review found 84.8%. That gap is why five other properties carry no number.
n=46 is small. A median drawn from a 31-document base is a reference point, not a market standard, and 30 days is not a legal standard. Redaction sets a further ceiling on any SEC-derived duration figure: 7 of 46 agreements contain a cure period but redact its length.
The consumer figures come from Benoliel and Becher, Termination Without Explanation Contracts, 2022 University of Illinois Law Review 1059. That study measures consumer sign-in-wrap online terms from the 500 most popular US websites, sampled from the Alexa Top Sites ranking and coded by searching for terminate, disable, deactivate, block, suspend and ban and then reading each matching clause. Its denominators shift from 500 to 485 to 482 between metrics, so each figure restates its own base. Those figures never mix with the B2B census.
Other sources: 11 U.S.C. section 365; FAR Subpart 49.5 with FAR 52.249-2 and FAR 52.249-8, which govern US federal procurement rather than commercial contracts; and World Commerce and Contracting, Most Negotiated Terms 2024.
| Issue | Market posture | Reasonable fallback | Push back hard |
|---|
| Convenience symmetry | Decide whether the convenience right is mutual or one-sided, and if it is one-sided, say which party holds it and why | Keep the right one-sided where one party controls the demand for the work, and price the exit | A convenience right that runs to one party with no notice period and no exit payment |
| Convenience notice period | Set the notice period against the ramp-down cost of the work; 30 days was the median and modal figure in Aline's census, on a base of 24 agreements stating a number | Use a longer period for staffed or dedicated-capacity work, matching the corpus range up to 365 days | A notice period shorter than the time it takes you to redeploy or replace the team |
| Cure period length | Agree the cure period and say what happens on a repeated or incurable breach; 30 days was the median and modal cure period in Aline's census, on a base of 31 agreements stating a number | Carve out a shorter period for non-payment, which several agreements in the corpus do | Termination for material breach with no cure period at all |
| Insolvency trigger | Decide whether insolvency is a termination ground and how the clause is expected to work once a bankruptcy case begins, given the section 365(e)(1) limit | Keep the trigger and qualify it by reference to applicable bankruptcy law | Reliance on automatic termination at the bankruptcy filing as your only protection |
| Prepaid fees | State on which termination grounds prepaid fees are refunded or credited pro rata, and whether the answer differs for customer termination for cause and supplier termination for cause | Refund or credit the unused balance on any termination the paying party did not cause | Silence on prepaid fees combined with a one-sided convenience right |
| Transition assistance | Ask for transition or wind-down assistance with a stated maximum duration, a stated rate, and a stated scope | Set the duration and rate in the master agreement and the scope in the statement of work | A general duty to cooperate with no duration, no rate, and no scope |
| Survival list | Enumerate the surviving sections by number and check that confidentiality, limitation of liability, indemnification and accrued payment obligations are on the list | Keep the nature-based catch-all as a backstop behind the enumerated list | A nature-based survival clause with no section numbers |
