Contract trap · Vendor and freelance
Exit asymmetry, one side locked in
One side may terminate 'at any time for convenience' with no payment for work in progress, while the other may terminate only for material breach after a long cure period, must give 90 days' notice, forfeits the advance or owes an early-termination fee equal to all fees for the remaining term.
- Severity
- Serious
- How often it turns up
- Common
- Holds up?
- Depends where you are
- Clause phrases
- 17
What it looks like in a contract
Redline matches these phrases against your document verbatim. Drafters rarely invent new wording — they copy it, which is why the same sentences turn up across unrelated contracts.
In English-language contracts
- Client may terminate this Agreement at any time for convenience
- Contractor may terminate only for material breach
- early termination fee
- remaining fees for the Term shall become immediately due
- non-refundable
- Contractor shall provide ninety (90) days' notice
- no compensation for work in progress
- upon thirty (30) days' notice and failure to cure
In Russian-language contracts
- Заказчик вправе отказаться в любое время без объяснения причин
- Исполнитель вправе расторгнуть договор только при условии уплаты штрафа
- плата за отказ от договора
- штраф за досрочное расторжение
- аванс не возвращается
- уплатить стоимость услуг за весь оставшийся срок
- уведомив не менее чем за 90 дней
- без возмещения выполненной части работ
- Исполнитель не вправе отказаться от исполнения
Check your own contract
Paste a clause, a page or the whole document. Nothing leaves your browser: the matching runs here, on this page, against the phrases above.
Why it bites
For the freelancer: months of work can be cancelled with nothing owed and no 'kill fee'; for the SMB client: a fee equal to the whole remaining term turns a 12-month agency contract into a debt you cannot escape even when the agency stops delivering.
Is it enforceable where you are
The same clause can be routine in one country and void in another. What follows is what the law says where you are — not advice on your particular contract.
B2B terms get much less protection: in the UK, UCTA 1977 s.3 tests standard terms for reasonableness; in the EU, the Late Payment Directive 2011/7 caps payment terms and P2B Regulation 2019/1150 applies to platforms.
United States
Enforceable; early-termination fees tested as liquidated damages (penalty if grossly disproportionate); termination for convenience with no payment for work performed is enforceable if clearly drafted — negotiate a kill fee.
European Union
Belgium B2B law grey-lists termination without reasonable notice; Germany §307 BGB can void one-sided standard-term termination rights; otherwise contractual freedom with good-faith limits.
- Cited
- §307 BGB
United Kingdom
Enforceable as written; termination fees judged under Makdessi (legitimate interest / not extravagant).
- Cited
- Makdessi
Russia
Ст. 782 ГК: заказчик вправе отказаться, оплатив фактические расходы, исполнитель — возместив убытки; между предпринимателями можно установить плату за отказ (ст. 310 п. 3; Пленум ВАС № 16 п. 4), но при очевидной несоразмерности суд вправе отказать во взыскании полностью или частично (Пленум ВС № 54 п. 16, ст. 10 ГК); «невозвратный аванс» без такой конструкции взыскивается обратно как неосновательное обогащение.
- Cited
- ст. 10 ГК
- ст. 310 п. 3
Where this has actually happened
Regulator actions, court rulings and the contracts they were fought over.
- Постановление Пленума ВАС РФ от 14.03.2014 № 16, п. 4 (плата за односторонний отказ между предпринимателями)
- ACCC v Fujifilm Business Innovation (2022) — one-sided termination terms declared unfair
What to do
In order, from the thing that takes a minute to the thing that takes a letter.
- Make termination for convenience mutual (30 days) with payment for work performed plus a kill fee (25-50% of the next milestone)
- Limit early-termination fees to 1-2 months' fees
- Require a cure period both ways
- State that prepaid but unearned fees are refundable
- RU: quantify any плата за отказ and keep it proportionate — courts can cut it.
Traps that travel with it
Drafters who use one of these usually use several.