With cause: Overview, definition, and example
What is "with cause"?
"With cause" refers to a situation where an action, such as termination, cancellation, or modification of an agreement, occurs due to a legitimate reason or justification. In legal and contractual contexts, the phrase "with cause" often refers to the grounds under which a party can take action, typically due to a violation, breach of terms, or failure to meet obligations. The cause must be significant enough to justify the action being taken. For example, terminating an employee "with cause" means there is a valid reason, such as misconduct or poor performance, for ending their employment.
In contrast, "without cause" generally refers to situations where no specific fault or violation is necessary for the action to occur.
Why is "with cause" important?
The concept of "with cause" is important because it ensures that actions, such as dismissals, terminations, or other significant decisions, are made based on legitimate reasons, rather than arbitrary or unjustified grounds. It provides a safeguard for both parties in an agreement by ensuring that one party cannot act capriciously or unfairly. For businesses, using "with cause" in termination clauses or other contracts helps maintain legal and ethical standards. For individuals, it ensures that decisions affecting their rights, employment, or contracts are made based on valid reasons that can be justified.
For example, in employment contracts, "with cause" clauses define what constitutes a valid reason for termination, helping both the employer and employee understand the grounds for ending the relationship and avoiding potential legal disputes.
Understanding "with cause" through an example
Imagine an employee who is consistently late to work, fails to complete their tasks, and disregards company policies. The employer may decide to terminate the employee "with cause" due to these performance issues and violations of company standards. This action is justified based on the employee’s behavior, and the employer has grounds to end the employment relationship without paying severance or providing notice.
In another example, a business has an agreement with a supplier to provide materials. If the supplier fails to meet delivery deadlines or provides faulty goods, the business may choose to terminate the contract "with cause" due to the supplier’s failure to meet the agreed-upon terms.
An example of a "with cause" clause
Here’s how a "with cause" clause might appear in a contract:
“The Employer may terminate the Employee’s employment with cause in the event of serious misconduct, violation of company policies, or failure to meet performance expectations. In such cases, the Employee will not be entitled to severance or notice, and any outstanding obligations will be settled as per the terms of this Agreement.”
Conclusion
"With cause" is a critical concept in contracts and agreements, ensuring that actions like termination or cancellation are based on legitimate, justified reasons. This protects the rights of all parties involved by preventing arbitrary or unfair decisions. Whether in employment, business agreements, or other contexts, understanding the definition and application of "with cause" clauses is essential for maintaining fairness, legal compliance, and clarity in contractual relationships.
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.