In a long-term outsourcing, software as a service (SaaS), or other services agreement, the customer will typically push for a termination right relating to the service provider’s breach, and perhaps for an insolvency event or change in control of the service provider. However, the customer should also consider including the right to terminate for its convenience (without cause), which could cover any of the following situations:
- The customer is not satisfied with the service provider’s performance under the contract even though the provider is meeting its service level and other performance requirements under the contract.
- Many alleged breaches by the service provider are initially “black and white” in the view of the customer, but they turn “gray” when the service provider pushes back and alleges nonperformance, nonresponsiveness, lack of cooperation, and the like on the part of the customer. Adding the customer’s right to termination for convenience can avoid the potential dispute over whether the customer has the right to terminate on other grounds.