Unqualified means unqualified
Where a contract clearly gives a party the right to terminate for convenience - at will, for any reason or none - English law will generally give effect to it. Courts are slow to imply a good-faith fetter on such a right in a negotiated commercial agreement between substantial parties.
In Monde Petroleum SA v Westernzagros Ltd [2016] EWHC 1472 (Comm), the court held that, outside established categories such as employment and partnership, a good-faith term is implied only where the contract would lack commercial or practical coherence without it. A termination-for-convenience clause needs no such implication to make sense, so none is implied.
The Braganza duty does not apply
Braganza v BP Shipping imposes a duty to exercise certain contractual discretions rationally and in good faith - but it applies to discretionary assessments, not to absolute rights. In TAQA Bratani Ltd v Rockrose UKCS8 LLC [2020] EWHC 58 (Comm), the court held that the Braganza doctrine has no application to unqualified termination provisions in expertly drawn complex commercial agreements between sophisticated parties.
The distinction is between a power to make an assessment affecting both parties' interests, where Braganza bites, and an absolute right exercisable for any reason, where it does not. An unqualified termination right is the latter.
Even an express good-faith clause may not reach it
A general good-faith clause elsewhere in the contract will not necessarily fetter a termination-for-convenience right. In Optimares SpA v Qatar Airways Group QCSC [2022] EWHC 2461 (Comm), the contract required the parties to act in good faith in performing their responsibilities and obligations, and gave the airline a right to terminate for its convenience and without incurring any liability. The court held that exercising a termination right was neither a responsibility nor an obligation, so the good-faith clause did not constrain it.
If you want a good-faith limit to apply to termination, the contract must say so expressly and specifically - a general good-faith clause is unlikely to be enough.
Notice compliance still matters
An unfettered right still has to be exercised in accordance with the clause - in particular its notice requirements. In Monde Petroleum, the notice was defective because it purported to terminate immediately when the contract required a period of notice. That defect did not amount to a repudiatory breach: a compliant notice could have been served at once, so the contract would have ended after the notice period anyway, and damages were limited accordingly to what would have been earned during that period.
The practical point is that a termination-for-convenience clause is a valuable exit with capped exposure - but the notice period must be realistic and actually complied with.
Cross-border: US law requires good faith
US law diverges sharply. Many US courts hold that a termination-for-convenience right in a services contract must be exercised in good faith - it cannot be used merely to recapture an opportunity or get a better deal elsewhere. In Questar Builders, Inc. v CB Flooring, LLC (Md. 2009), the Maryland Court of Appeals held that a termination-for-convenience clause was subject to an implied obligation of good faith and fair dealing, and that a contractor could not terminate simply because it had lost confidence in the subcontractor.
So a clause that is effectively unfettered in England may be read with a good-faith limit in the US. For cross-border deals, address this expressly. (This is US law, flagged for cross-border deals - take local advice.)
Use at the desk
Practical checklist
- A clear, unqualified termination-for-convenience right is largely unfettered under English law (Monde Petroleum v Westernzagros [2016] EWHC 1472 (Comm)).
- Do not expect the Braganza duty to apply to an absolute termination right (TAQA Bratani v Rockrose [2020] EWHC 58 (Comm)).
- A general good-faith clause may not fetter termination - say so expressly if you want it to (Optimares v Qatar Airways [2022] EWHC 2461 (Comm)).
- Comply with the notice requirements - a defective notice can cap or delay recovery, even if not repudiatory (Monde Petroleum).
- For US-governed or US-enforced deals, expect a good-faith limit on termination for convenience (Questar Builders (Md. 2009)).
- Make notice periods realistic and achievable when drafting the clause.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
Product demo
Use the guide for context. Use Veqtor for the Word documents.
Watch Claude compare negotiation drafts and create a separate Word document with proposed tracked changes.
See Veqtor work with Word redlines