Termination for convenience clauses and good faith

Abstract

This article considers the legal validity of so-called termination for convenience clauses, which allow at least one party to the contract to terminate the contract without cause. Such rights are in contrast to more traditional approaches to contractual termination, which distinguished between breaches of condition and breaches of warranty, allowing termination only for the former. Specifically, it will be asked whether such termination for convenience clauses are consistent with requirements of good faith in contracting, the existence of which is itself contentious. As a result, it will be necessary to consider the current state of the law in Australia and elsewhere in relation to the extent to which good faith is and should be a feature of contracting.