Legal English Challenge 4.0 – Day 20

Read the short text about termination clauses, then select the correct option from the list to complete (1) … to (10) … .

Every modern commercial contract incorporates a termination clause, delineating the conditions under which the contract may conclude __1___ before the agreed-upon termination date. Typically, termination clauses outline three principal methods by which such early termination can occur.

 The first method involves one party giving ___2___ to the other, signifying a termination. The termination clause often specifies that the notice must be ___3___. For example, in employment contracts, it is customary to have a notice period, typically around four weeks.

The second method of termination occurs when one of the parties ___4___ a material breach of the contract. A material breach is a serious breach that has a substantial impact on the ___5___ party, for example, non-payment for the goods and services furnished. Minor breaches, which are smaller and less ___6___, usually do not give rise to contract termination, as they are not considered serious enough, such as delay in delivery.

The third method of termination arises when one of the parties encounters severe ___7___ difficulties. Many termination clauses stipulate that if a party’s business goes into  liquidation, with a liquidator appointed to sell its ___8___, the contract will be terminated. This provision is designed to safeguard the party potentially facing financial loss if the contract ___9___. Additionally, termination clauses often specify that if a party’s business ___10___ trading, implying it no longer operates as a business entity, the contract will terminate immediately.

Now, press the START button to select the correct option from the list to complete (1) ….. to (10) ….. .