No suspension: Overview, definition, and example
What is no suspension?
A no suspension clause is a contractual provision that ensures one party cannot suspend or delay its obligations under the agreement unless specific conditions are met. This clause is commonly used in service contracts, supply agreements, and loan agreements to prevent interruptions in performance or payment.
Why is a no suspension clause important?
This clause provides stability and ensures that contractual obligations continue without disruption. Without it, a party could pause or delay its performance, causing financial or operational difficulties for the other party.
For example, in a supply contract, if the supplier has the right to suspend deliveries at any time, the buyer could face production delays and financial losses. A no suspension clause helps prevent such risks by ensuring uninterrupted service or supply unless explicitly allowed by the contract.
Understanding no suspension through an example
Imagine you own a restaurant and have a contract with a food supplier that delivers fresh ingredients weekly. The supplier suddenly stops deliveries due to a dispute over minor unpaid invoices, even though your contract does not allow for suspension.
If your contract includes a no suspension clause, you can enforce it to ensure that deliveries continue while any payment issues are resolved through proper channels, preventing disruption to your business.
An example of a no suspension clause
Here’s how a no suspension clause might appear in a contract:
“Neither party shall suspend or delay the performance of its obligations under this Agreement, except as expressly permitted herein. Any suspension of services, payments, or deliveries must be mutually agreed upon in writing or permitted under applicable law.”
This clause ensures that neither party can unilaterally halt their obligations without proper justification.
Conclusion
A no suspension clause is crucial for ensuring that contracts run smoothly without unexpected interruptions. For SMBs, including this clause in agreements with suppliers, service providers, or business partners helps prevent disruptions that could affect operations and revenue.If you’re entering a business contract, ensure it includes a no suspension clause to protect your business from unnecessary delays and uncertainties.
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.