Thoughts on this termination clause

[warp9]

A software developer we use has just sent me over a 2 year contract to sign. We've been rolling along on a monthly retainer and think this is them doing some housekeeping which they haven't been great at. However, I'm going to stop using their services in around 6 months as we're in the process of changing systems.

I'm no legal expert, but this termination clause doesn't look very tight. Any thoughts?

7. TERMINATING THE AGREEMENT. With reasonable cause, either party may terminate this Agreement by giving 3 months written notice of termination for cause. Reasonable cause includes:

(i) A material violation of this agreement, or

(ii) Non-payment of ABCCo's compensation after 20 days written demand for payment.

ABCCo shall be entitled to full payment for services performed prior to the effective date of termination.

[Akiraprise]

Maybe worth speaking to them about your intentions to use them for 6 months rather than signing an agreement for 2 years and then trying to get out of it?

[APontus]

Akiraprise said:

Maybe worth speaking to them about your intentions to use them for 6 months rather than signing an agreement for 2 years and then trying to get out of it?

This. Don't sign a 2 year agreement knowing you don't intend to honour it. How would you feel if your clients acting similarly?

[warp9]

APontus said:

Akiraprise said:

Maybe worth speaking to them about your intentions to use them for 6 months rather than signing an agreement for 2 years and then trying to get out of it?

This. Don't sign a 2 year agreement knowing you don't intend to honour it. How would you feel if your clients acting similarly?

I agree, I was leaning towards doing this, just a little concerned about whether they continue to service us satisfactorily knowing we are leaving.

[APontus]

warp9 said:

I agree, I was leaning towards doing this, just a little concerned about whether they continue to service us satisfactorily knowing we are leaving.

The contract should protect against that.

[warp9]

APontus said:

warp9 said:

I agree, I was leaning towards doing this, just a little concerned about whether they continue to service us satisfactorily knowing we are leaving.

The contract should protect against that.

It should, but in my experience, pride, ego and 'other priorities' often get in the way!

[sociopath]

warp9 said:

APontus said:

warp9 said:

I agree, I was leaning towards doing this, just a little concerned about whether they continue to service us satisfactorily knowing we are leaving.

The contract should protect against that.

It should, but in my experience, pride, ego and 'other priorities' often get in the way!

Seems like pride, ego and 'other priorities' have got in the way of you giving them a heads up about your termination plans too.

[deggles]

I am also no legal expert, but signing a contract you have no intention of honouring is dodgy as fk. Developer could be turning down other projects on the basis of your empty gesture

[singlecoil]

Seems simple enough, tell them you don't want to sign a 2 year contract. You don't need to tell them why.

[jonsp]

singlecoil said:

Seems simple enough, tell them you don't want to sign a 2 year contract. You don't need to tell them why.

OK but presumably the terms on offer for a 6 month contract would be significantly different. As you say the why is irrelevant to that.

Benefitting from the (presumably favourable) terms on offer for a 2 year contract when you're actively developing your own system to go live in 6 months is not going to look good if this ever comes before a judge.

How about asking the supplier why he needs a 2 year commitment? If he can't justify that credibly offer them 2 years with cancellation on 3 months notice for any reason on the basis you like to keep your options open/who knows what the future holds etc.

[singlecoil]

warp9 said:

...Reasonable cause includes:

The key word here is 'includes'. It allows for the possibility of there being other reasonable causes. Not wanting to continue is an entirely reasonable cause.

[Jaguar99]

warp9 said:

I agree, I was leaning towards doing this, just a little concerned about whether they continue to service us satisfactorily knowing we are leaving.

They’re a contractor and contracts end. This shouldn’t be a shock to them or something to cause them to play up

I have served notice on many contractors over the years and have never had an issue. I do always make sure I sit down with them and explain why and when pretty much as if they were an employee. This seems to be appreciated and is much better than emailing them an end date out of the blue