# Termination for Cause Clause

Source: https://contracko.com/clause-library/termination-for-cause

# Termination for Cause Clause

Allows a party to end the contract when the other materially breaches, often after a chance to cure.

## What it is

Termination for cause lets the innocent party end the agreement when the other commits a material breach, becomes insolvent, or repeatedly defaults. Under Dutch law this typically takes the form of ontbinding, available for any non-trivial failure to perform under BW 6:265.

## Why it matters

It is the contract's safety valve against a defaulting counterparty. Clear cure periods and a precise definition of "material breach" prevent disputes about whether termination was justified; wrongful termination can itself be a breach.

## How to apply it

- Define material breach and list automatic triggers such as insolvency.
- Provide a cure period and require a notice of default (ingebrekestelling) where needed.
- State the effect of termination and which obligations survive.
- Address restitution and settlement of work performed up to termination.

## Sample wording

> Either party may terminate this Agreement with immediate effect if the other commits a material breach that, being curable, is not cured within thirty (30) days of written notice.

## Negotiation tips

- • Negotiate which breaches are "incurable" and allow immediate termination.
- • Consider contractually narrowing the broad BW 6:265 right for minor failures.

## Common pitfalls

- • Terminating without the required notice of default, making the termination wrongful.
- • Leaving "material breach" undefined, so any minor default is argued to justify exit.

### How Contracko helps

Contracko stores all your contracts in one searchable repository so you can instantly locate which agreements contain specific cure-period lengths or insolvency triggers when a counterparty defaults. Its AI review flags clauses where material breach is undefined or cure periods are missing, and tracks breach-notice and cure deadlines as milestones with reminders, helping you meet procedural requirements before moving to termination.

## Legal references

- [BW 6:265 Dissolution for breach (ontbinding) Dutch law](https://wetten.overheid.nl/BWBR0005289)
- [BW 6:74 Damages for non-performance Dutch law](https://wetten.overheid.nl/BWBR0005289)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Software & SaaS](https://contracko.com/industries/software-saas)[Construction](https://contracko.com/industries/construction-industry)[Consulting](https://contracko.com/industries/consulting)[Manufacturing](https://contracko.com/industries/manufacturing)[Logistics & Distribution](https://contracko.com/industries/logistics)

## Related clauses

- [Termination for Convenience Clause](https://contracko.com/clause-library/termination-for-convenience)
- [Force Majeure Clause](https://contracko.com/clause-library/force-majeure)
- [Liquidated Damages Clause](https://contracko.com/clause-library/liquidated-damages)

## Related terms

- [Termination](https://contracko.com/glossary/termination)
- [Breach of contract](https://contracko.com/glossary/breach-of-contract)
- [Rescission](https://contracko.com/glossary/rescission)

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## Frequently asked questions

Common questions about this clause.

- **Q:** Do I always need a notice of default before terminating in the Netherlands?
  **A:** Often yes. Unless performance is permanently impossible or a deadline has passed, BW generally requires putting the party in default with a cure period first.

- **Q:** Is any breach enough to terminate under BW 6:265?
  **A:** In principle, but a breach that is too minor given its consequences does not justify dissolution; parties often narrow this by contract.

- **Q:** What happens to payments already made after a contract is dissolved?
  **A:** Dissolution triggers a mutual duty to undo what has been performed (ongedaanmaking) under BW 6:271, so payments and deliveries must be settled; only partly performed contracts may allow a reasonable price claim.

- **Q:** Can a party terminate immediately for insolvency of the other?
  **A:** Yes, if the clause lists insolvency as an automatic termination trigger. Without such a clause, insolvency alone is not necessarily a breach, and termination still depends on the contractual and statutory tests.

- **Q:** What damages can an innocent party claim after terminating for cause?
  **A:** Damages for all losses caused by the breach, including the cost of sourcing a replacement, subject to the duty to mitigate and any liability cap in the contract.

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