Whether you’re renting a flat, starting a job, or signing a freelance contract, understanding how to exit a contract early is one of the most important things you can know before signing.
What is an exit clause?
An exit clause lets one or both parties end the contract early, typically with a notice period and sometimes a financial consequence. Without one, leaving early may constitute a material breach.
What is a break clause?
In older fixed-term tenancies, and in places where fixed terms still exist, a break clause gives the right to exit at a defined point, with a specified notice period. In England, tenants can now end a tenancy with two months’ notice, so break clauses matter less there.
What happens without one?
On a £1,800/month service or supplier contract with 8 months remaining, leaving without an exit clause could mean liability of up to £14,400. Rules for tenancies differ in Wales, Scotland and Northern Ireland.
Termination for cause vs convenience
Termination for cause allows exit if the other party breaches the contract. Termination for convenience allows exit simply because you want to — usually requiring a fee or notice period.
Negotiating a break clause
For a fixed-term tenancy (where fixed terms still exist): “I’d like to include a mutual break clause at the 6-month point, exercisable with 2 months’ written notice by either party.”
For a service agreement: “I’d like a termination for convenience clause allowing either party to exit with 30 days’ notice after the initial 3-month term.”
Want to check your exit rights?
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