Grounds: Overview, definition, and example
What is grounds?
In legal and contractual terms, grounds refers to the reasons or justifications for taking a particular action—such as terminating a contract, filing a lawsuit, or enforcing a penalty. It answers the question, “What is the legal or factual basis for this action?”
In plain terms, grounds are the valid reasons you can point to when doing something serious under an agreement—like ending it early or holding someone accountable.
Why is grounds important?
Whether you're terminating a contract, disciplining an employee, or taking legal action, you need to have clear grounds—or your decision might be challenged. Many contracts spell out specific grounds for certain actions, like “grounds for termination” or “grounds for suspension,” to make sure everyone knows what’s allowed and what isn’t.
Having defined grounds helps prevent misuse of power, reduces the risk of legal disputes, and ensures that decisions are based on facts—not just opinions or assumptions.
Understanding grounds through an example
Let’s say your business hires a contractor to deliver a software system by a certain date. The contract says you can terminate the agreement on the grounds of “material breach,” such as missing a critical deadline.
If the contractor delivers two months late with no valid excuse, you now have grounds to terminate the contract early. You’re not just walking away—you’re doing it based on a specific reason that the contract allows.
On the other hand, if you terminated without clear grounds, the contractor could claim wrongful termination and potentially sue for damages.
An example of a grounds clause
Here’s how a clause involving grounds might appear in a contract:
“Either party may terminate this Agreement upon written notice if there are reasonable grounds to believe that the other party has materially breached any of its obligations under this Agreement and failed to cure such breach within thirty (30) days of receiving notice.”
Conclusion
Grounds are the legal or factual reasons that justify an action under a contract or the law. They help bring structure, fairness, and accountability to business decisions—especially when taking serious steps like terminating a deal or enforcing a right.
Before making any big move in a business relationship, always ask: “Do I have solid grounds?” If the answer is yes—and it's backed by your contract—you’re likely on safer footing.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.