Survival of termination: Overview, definition, and example
What is survival of termination?
Survival of termination refers to the provisions in a contract that remain in effect even after the contract has been terminated. Certain obligations, rights, or clauses, such as confidentiality, indemnity, dispute resolution, or payment for services rendered, may "survive" the termination of the agreement. These surviving clauses continue to bind the parties even after the contractual relationship has ended, ensuring that certain responsibilities or protections are upheld beyond the contract's duration.
Why is survival of termination important?
Survival of termination is important because it ensures that specific obligations or protections that are crucial for one party’s interests remain enforceable even after the contract is no longer in force. Without such provisions, important matters such as protecting confidential information, resolving disputes, or addressing liabilities could be left unresolved after the contract ends. Survival clauses provide clarity on what parties must continue to adhere to after termination and ensure that certain aspects of the agreement are not overlooked.
Understanding survival of termination through an example
Let’s say a company hires a contractor to complete a project. The contract includes a confidentiality clause that requires the contractor to keep sensitive information private even after the project is completed and the contract is terminated. If the contract does not include survival of termination for the confidentiality clause, the contractor may not be legally obligated to continue keeping that information confidential after the contract ends. By including a survival clause, the company ensures that the confidentiality obligation persists even after the contract is terminated.
In another example, a company may terminate an agreement with a supplier, but still be required to settle any outstanding payments for goods or services received before the termination. A survival of termination clause ensures that the payment obligation remains in effect, even after the contractual relationship has ended.
An example of a survival of termination clause
Here’s how a survival of termination clause might appear in a contract:
“The obligations under Section 5 (Confidentiality), Section 7 (Indemnification), and Section 9 (Dispute Resolution) shall survive the termination or expiration of this Agreement, and remain in full force and effect thereafter.”
Conclusion
Survival of termination clauses are essential for maintaining certain rights and obligations after the formal end of a contract. These clauses ensure that important provisions, such as confidentiality, liability, or dispute resolution, continue to be enforceable even after the contract is terminated. By including survival of termination clauses, businesses can protect their interests and ensure that critical matters are addressed and upheld, even once the contractual relationship has ended.
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.