This issue refers to provisions that illustrate the range of conditions that may trigger early termination of, or withdrawal from, an agreement. There are some types of termination rights that are commonly found in agreements, whereas others may be specific to the circumstances of a particular partnership or project. Termination provisions can help to ensure efficient use of funding and other resources by providing a mechanism to discontinue the work and payments under an agreement when it becomes evident that it will not succeed in its intended outcomes.
Questions to consider when developing a termination provision
- Under what circumstances may a party terminate the agreement?
- Under what circumstances may a party withdraw from the consortium/project?
Example approaches found in the MAPGuide
- Events that often permit either party to terminate an agreement include:
- Material breach (i.e. a failure by one party to fulfill substantial parts of the agreement, resulting in a significant adverse impact on the other party);
- Bankruptcy of the other party;
- A force majeure event (i.e. an unforeseen event outside of the control of the agreement parties);
- Fraud, financial irregularities, or breach of anti-bribery and anti-corruption requirements;
- Mutual agreement between the parties to end the project; and/or
- A change in ownership of the other party which would substantially impact the ability of that party to perform its obligations.
- Agreements in the MAPGuide related to a product that has not yet received regulatory approval (for example, advance purchase or development funding agreements) sometimes allow for termination if there is an adverse safety signal or other evidence that the product is likely to have an unsuitable safety and efficacy profile.
- Some consortium agreements in the MAPGuide allow one party to withdraw if key personnel are unwilling or unable to continue work on the project and suitable replacements cannot be found.
Related MAPGuideⓇ Commentaries & Resources
- Equitable Access Toolkit: How Can Dispute Resolution and Termination Provisions Support the Achievement of Equitable Access Objectives? – A discussion of how termination provisions provide options that parties to an R&D funding agreement can pursue in the event of disagreements, breaches of obligations, or product failures. These provisions can help to ensure effective ongoing use of public and philanthropic funds and maximize the potential for achieving the equitable access goals of a project by providing for continued product development with new partners.