One sided i.e. unilateral termination clause in a contract; Does this render contract void / unenforceable? I am a non-lawyer reading a relatively simple contract draft where everything else seems fine and dandy but the termination clause just says the following: You agree that Company (A) retains the right to terminate this agreement at anytime. Don't such unilateral termination clauses (sans notice) make a contract void and unenforceable? Just curious. It's a low stakes contract (somewhat of a formality) so I don't care much either way, but just wanting to get my legal fundamentals right, now that I have a chance. Edit: (a) Does a clause like this give party A any advantage over the other? As it stands, both parties are allowed to terminate so long as they communicate, right? And without mentioning notice periods or acceptable causes for termination what value does a clause like this add? (b) More generally what is the utility of a termination clause when it does not add details about notice periods, or acceptable causes etc? A simple termination seems a recourse that is implicitly allowed, in any case, right? Whether I put such a termination clause or not? e.g. "Both parties have a right to terminate this agreement at any time" What's the utility of such a clause? Even if I didn't write this explicitly that's what will be the default position?
Unilateral termination clauses are legal and very common They even have a name: termination for convenience. However, a contract is not terminated unless and until it is communicated to the other party. Rights and obligations that have accrued up until termination are enforceable.
This is not a "if you breach the contract we may sue you" clause. This is a clause which says "if we find you trying to breach the contract, we can ask a court to stop you from doing so (even though you may not have actually breached the contract at that point in time)". The provision entitles the aggrieved party to specific relief - in this case, by the way of an injunction. Specific relief means relief of certain determined nature or of a specific kind, rather than a general relief or damages or compensation. Essentially, the clause that provides that if the receiving party of the confidential information threatens to disclose such information, the disclosing party shall be entitled to ask the court to specifically order the receiving party not to disclose the confidential information (as opposed to post-facto asking for damages for the harm caused by reason of such disclosure). In the absence of this provision, a court may rule that the disclosing party has no locus to take pre-emptive legal action, as no damage has been caused yet by the other party.
Clarity is always better than ambiguity in drafting a contract. Conflicts about contracts are always easier to resolve when they are formed then when they are on foot. If you are concerned that the clause can be interpreted in the way you suggest (and it is not a groundless concern) raise it now and have the clause redrafted to remove the ambiguity.
Is this even legal? Yes, it is lawful. The Ontario Tenancy Act does not seem to outlaw that type of clauses. But the clause (or lease) will be binding only if you agree to it. Also note that the clause refers to reasonable costs, which implies that those costs must be for a reasonable cause. In other words, the landlord would be barred from recovery of legal expenses if you persuade the Board that the landlord's complaint is frivolous or vexatious. Notwithstanding that the clause is lawful, I would personally discourage you from agreeing to pay the adversary's attorney fees. Note that the clause may apply in the event that neither party fully prevails, whence it is in your best interest to preclude the risk of having to reimburse the landlord in that scenario.
Assuming there is a contract (and it is not clear that there is), this is a purported liquidated damages clause. Alice is trying to dictate what Bob will owe her if he breaches his promise to not share the file. However, there are limits on what can be stipulated in a liquidated damages clause. Super Save Disposal Inc. v. Blazin Auto Ltd., 2011 BCSC 1784: The enforceability of a liquidated damages provision in an agreement engages two competing objectives: freedom of contract versus the right of the courts to intervene in a given case to relieve against an oppressive or unconscionable result flowing from enforcement of the liquidated damages term. It is well settled that the enforceability of such a term turns on whether it is a genuine pre-estimate of the expected loss that a party will sustain in the event of a breach of contract or a penalty clause so oppressive or unreasonable that equitable intervention is justified to prevent an injustice. Judicial interference with a liquidated damages provision will be justified if enforcement of the term results in payment of a sum which is extravagant and unconscionable in comparison with the greatest loss that could conceivably be proved to have followed from the breach Oppressive liquidated damages clauses work against a person's freedom to breach and the possibility of efficient breach. Perhaps if the file were a trade secret like the Coke recipe, the $1,000,000 might be a genuine pre-breach estimate, but without much more information about the nature of the file, I predict a court would find the $1,000,000 to be extravagant and unconscionable in comparison to the greatest loss that could conceivably be proved to have followed from the breach. What follows is less researched. If it is not a contract then I think it is at best a licence, which would make Bob's agreement to pay $1,000,000 a free-standing unenforceable promise. I also agree with Matthew's position on the possibility (and limitations of) a claim in promissory estoppel, especially in jurisdictions following Waltons Stores or similar reasoning.
are contract terms enforceable that say the employee has to pay the employer if they leave without giving notice? Yes, as long as the penalization is not of punitive nature. The doctrine of at-will employment is only the default condition, but a contract may supersede it. As for the extra question, reciprocity of sanctions (as in leaving without notice) is not a requirement for enforceability of a contract. In general, the lack of reciprocity only signals that there is a difference in the parties' bargaining power, but usually that does not affect enforceability.
If two parties have a contract, where one party is required to do X in exchange for the other party doing Y, then the terms specified in that contract would determine what happens. You would have to see exactly what it says, especially if the other party has the option to not give you money. A contract might say "A shall at his option give B $5,000 by date X; if A elects not to make payment, notice must be given 60 days before X". Failing to give timely notice is thus breech of contract. However if the clause only says "A shall at his option give B $5,000 by date X", then there is no requirement for advance notice. And this assumes that there is a contract whereby both parties have some obligation to the other. A gift, on the other hand, carries no obligations on the giving party. There may be some social code to the effect that they should have told you by now, but failing to give advance notice is at most rude and certainly not legally actionable.
Is it even possible for two separate agreements to be made exactly contemporaneously? The issue is not whether two separate agreements on the same matter(s) can be entered at exactly the same time. By contemporaneous agreement, a "Supersedes Previous" clause refers to any agreement which was in force at the time the new one is entered (or just prior to the new one being entered). what happens if other agreements have this clause (that it supersedes all other agreements)? doesn't this result in multiple agreements superseding each other? There is no general answer to that, as it highly depends on a wide range of circumstances. For instance, if two (or more) mutually superseding, contradictory agreements are drafted by the same party, the non-draftsman may invoke the doctrine of contra proferentem to determine which agreement is binding for the controversy at issue. When contra proferentem is inapplicable, ambiguities would be adjudged in a way that is most consistent with the intent of the parties as ascertainable from the rest of terms and conditions. The fact that two parties knowingly and willfully entered contradictory agreements can only complicate the task of identifying the legitimate intent of their contract(s). In a context where the legal relation is so fuzzy, things can backfire when the dispute is adjudged. Thus, it is not in the parties' best interest to deliberately commit to flawed clauses in the first place.