May 23, 2022

What Terms Should Survive Termination of a Contract

If the survival clauses of the terms apply to the obligations primarily set out in the contract, this may lead to real confusion as to what has been agreed to apply after termination. Survival clauses can also extend the duration of surviving obligations either by the occurrence of an event (“. until the confidential information becomes public”) or a certain period of time (.” 5 years after termination”). Many contracts contain compensation language. If the wording of the indemnification only covers breaches of contract, one party may not want it to survive the termination, as this would allow the other party to make a claim for breach of the terminated contract. The general rule is that the limitation of liability clause does not survive the termination of the contract, unless expressly intended by the parties. When contracts end, the parties` main legal obligations under the contract end. You are no longer legally obliged to execute them. Other clauses generally recognized as surviving termination of a contract include limitation of liability clauses, arbitration clauses and (potentially) indemnification clauses.

Since termination only terminates unfulfilled obligations, any obligations or rights arising prior to termination will remain in place. For example, the Court of Appeal in Brown v. Langwoods Photo Stores Ltd confirmed that if a contract is terminated under the law, all rights based on a prior infringement or performance will continue to exist. A contractual provision can be formulated in such a way that it offers its own “independent” conditions of survival. However, you may have the limitation of the liability clause expressly designed as such even after the termination of the contract. Any specific agreement contained in this Agreement that requires performance after the Closing Date will survive the Closing Date indefinitely. It happens quite often that you discover a survival clause in your contract. Provisions that, by their nature, are intended to survive the termination or expiration of this Agreement will survive. For example, if a contract has a three-year term, the limitation of liability clause applies to all claims arising out of or caused by that three-year period. Will a commitment survive 30 days, 1 year, 10 years or even forever? The continued existence of representations and warranties should be addressed in the representations and warranties clause and not in a separate survival clause. The parties must indicate in the representation and warranty clause how long the facts disclosed as representations or warranties are guaranteed. The phrase that is supposed to survive termination occurs in all sorts of formulations: Are you looking for a commercial contract attorney to get help with a contract? For a first discussion, call +44 20 7036 9282 or send us an e-mail at

the rights and obligations of the Parties set out in this Section 17.5 and Section 1, Section 14, Section 15.1, Section 15.3, Section 15.4, Section 16, Section 18, Section 19, Section 21 and Section 22, as well as any rights or obligations of the Parties in this Agreement, as determined by their express terms or their nature and context, will survive the termination or expiration of this Agreement, such termination or expiration. Termination will not affect accrued rights, indemnities, existing obligations or contractual provisions intended to survive termination and will be effected without penalty or other additional payments. The usual rule that is applied in the absence of a survival clause of the terms is that provisions that can reasonably be expected to continue after the end of the contract will be maintained. If, for example, a contract contains restrictive covenants that take effect after termination, these will of course remain in force after termination. Some contracts may not contain confidentiality or non-compete obligations. Or they may not have results after graduation. But they may have other unique provisions that the parties want to survive the termination of the contract. However, when negotiating their contracts, all parties should assess where survival is needed to achieve their goals.

A survival clause may even stipulate that certain obligations must survive indefinitely. Instead of using a survival clause, it is easier to specify how each clause or section will survive. This is the preferred method for describing the survival of conditions in a contract. For example, you could include in the non-compete clause a survival section that states that the terms of the contract begin on the effective date and that the clause remains in effect for a number of years after the agreement expires or is terminated. .