Four termination categories, each different
- Termination for convenience. Either party may terminate with notice (standard: 90 days written). No fault required. This is the most common termination path and should be in every agreement.
- Termination for cause (uncured material breach). One party gives notice of breach; the other has 30 days to cure. If not cured, the giving party may terminate immediately. Define "material breach" with examples to reduce dispute scope.
- Termination for insolvency. Immediate termination right if the other party becomes insolvent, files bankruptcy, or has a receiver appointed. Standard clause across all partner agreements.
- Termination for change of control. Optional and contentious. Some vendors want the right to terminate if a partner is acquired by a competitor; some partners want symmetric rights. Default if included: 60 days notice post-acquisition, mutual.
Notice periods (and why 90 days)
The 90-day notice for termination for convenience is not arbitrary. It maps to the time required to: notify mutual customers, close out in-flight deals, settle outstanding commissions, transition customer-facing assets (marketplace listings, joint marketing), and communicate the change to both internal teams. Anything shorter than 60 days creates operational chaos. Anything longer than 120 days holds parties hostage.
In-flight deal protection
The single most important post-termination clause: deals registered prior to termination notice continue under existing commission terms if they close within an agreed window. Standard pattern: deals registered prior to notice continue to be eligible for commission for 180 days post-termination. Without this, partners stop selling the moment notice is given, which is bad for both sides.
Edge case to address: deals registered between notice and effective termination. Default: registrations during the notice period are honored if they meet standard eligibility, but the protection window is the standard 90 days from registration (not extended).
Customer continuity (the retention rule)
Customers acquired through a partner who is terminating need a transition plan. The clause that prevents churn:
Upon termination, Partner shall cooperate with Vendor in transitioning ongoing customer support obligations to Vendor or to Vendor's designee. Vendor shall continue to honor all customer contracts in effect at the time of termination, including pricing and service terms, regardless of changes in partner relationship.
This protects the customer from being caught in the middle. Without it, you lose customers as collateral damage in partner disputes.
Surviving obligations (what does not end)
Termination ends most obligations; some survive. The standard list:
- Confidentiality obligations (typically 3 years post-termination)
- Indemnification for pre-termination acts (in perpetuity)
- Payment of accrued and earned commissions (no time limit)
- License to use jointly created marketing assets (perpetual non-exclusive)
- Limitation of liability (perpetual)
- Governing law and dispute resolution (perpetual)
Name the surviving clauses explicitly. Generic "surviving clauses shall survive" language is too vague and gets litigated.