Term and Termination
In most cases, the only effective dates that must be included in a contract are the start and end dates, referred to together as the term of the contract.
It is highly desirable that the start and end effective dates be specified only once in a contract, and that they be placed in a separate section together with any contract termination provisions.
The execution date is understood to be the date that the contract is signed by the last person who needs to sign the contract, and therefore does NOT need to be stated in the body of the contract. This understanding is also why it is important for signature blocks to include spaces for the signor's to date their signatures.
Termination clauses allow a party who is dissatisfied to dissolve the agreement. Some things to keep in mind regarding termination clauses are:
- Notice should be in writing.
- The prior notice period required before termination is effective may be any amount of time, but 30 days is the norm.
- Shorter term contracts, such as consulting contracts, may require 5 or 10 days prior notice to be given first via phone, then followed up immediately by written notice.
- Longer term or high dollar contracts may require longer prior notice periods, especially those for residents and faculty funding where termination will cause TTUHSC undue hardship.
- Notice requirements in affiliation agreements may be drafted in such a way as to allow students currently on rotation at the facility to complete that rotation.
For contracts where there is no desire to continue the agreement past the end date, use the following language:
TERM AND TERMINATION
This contract starts [month, day, year], and ends [month, day, year].
Either party may terminate this contract at any time, with or without cause, by giving
the other party thirty (30) days written notice to terminate.
For contracts where there is a probability that the agreement will continue past the end date, the contract should be renewed automatically for successive one year periods, using the following language:
TERM AND TERMINATION
The original term of this agreement starts [month, day, year], and ends [month, day, year]. If notice of termination has not been given by either party by the time of expiration
of the current term of this agreement, this agreement shall be automatically renewed
for one year. Either party may terminate this contract at any time with or without
cause by giving the other party thirty (30) days written notice of termination.
NOTE: For renewal of a contract that previously had an automatic renewal provision, add the following paragraph:
This agreement supersedes all previous agreements pertaining to the subject-matter
of this agreement whether such agreement was written or oral.
NOTE: For agreements that involve revenue coming in to TTUHSC, add the following to the same paragraph that sets forth the compensation and terms of payment:
This agreement shall terminate immediately upon nonpayment.
NOTE: In other situations, it may be appropriate to add other termination language such as these two examples:
This agreement shall terminate immediately if physician should lose his/her license.
This agreement shall terminate immediately if physician is unable to perform services
due to ...[specify condition(s)].