READI

(Rights for Electronic Access to and Delivery of Information)

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TERM / TERMINATION / EXTENSIONS

Definition

The term of a contract refers to the length of time it remains active between the parties.

Discussion

As in most contracts, the term is negotiated between the parties to satisfy both buyers and sellers with respect to the delivery of information and other aspects of the agreement. Commonly, the term is for at least one year, but the term may last for longer periods. It is recommended that buyers and sellers consult standard legal guidelines for this portion of the contract and engage attorneys to generate appropriate language.

This clause may also call for either the destruction of the media as provided in the contract (see "Backup") at the conclusion of the agreement--or it may call for the buyer to continue to make use of the information beyond the term of the agreement.

Certain financial issues may also emerge at termination--items having to do with deposits, payments, etc. that must be resolved and calculated upon termination.

Commonly, appropriate language is inserted in this clause or a parallel clause which outlines the protocol for notice of termination. This paragraph may identify under what conditions one or both of the parties may terminate the agreement prior to its designated conclusion date. Often the only acceptable reason for terminating prior to the official termination date (or conclusion of the contract) is what is legally called "for cause." Under such conditions, it is recommended that the parties outline precisely what failures would be considered cause for termination. Most agreements identify the number of days, weeks, or months necessary for one party to give the other about its intention to terminate prior to the contract's official conclusion. Even so, it is recommended that agreements allow for a period under which adjudicating the reasons for canceling an agreement in advance of its official conclusion (see "Disputes").

Most agreements provide for the parties to extend the agreement beyond the termination date and provide for days, weeks, or months in advance of termination to allow the parties to negotiate contract renewal, or the agreement specifies that (beyond a certain date prior to termination), often expressed in days, weeks or months, that the agreement will be automatically renewed under the same terms and conditions, or extended under new terms and conditions outlined in the agreement.

Benefits

No agreement should be signed without a clear termination clause. It gives both parties an understanding as to the length of time of service and permits, if necessary, renegotiation of the contract at designated periods (see "Extensions").

Risks

The principal risk of entering into a contract for a specific period of time is that either of the parties may find the terms of the agreement onerous--the information (or service) may become overly expensive; too little (or too much) information may be delivered for the agreed upon price; new developments in information delivery may make the old agreement obsolete; and other issues may arise before termination that the parties may not have envisioned when the contract was first concluded. Before termination, the parties to the agreement may be unhappy with the terms and conditions imposed. The necessity for both parties to be obligated for a specific length of time, despite unhappiness, can become burdensome.

Nevertheless, there are occasions where it is prudent to determine, from direct contact with the other party, as to whether the other signatory may be prepared to end the contract prior to the termination date without penalty in order to relieve the unhappy party of the necessity to continue. On occasion, the other party will willingly withdraw, allowing the contract to terminate early and amicably.

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