Doing Business in China For Dummies®

Cross-Termination

Every agreement should have a termination provision (unless it’s indefinite, in which case that should be explicitly stated). A termination provision typically specifies the length of the agreement while allowing one or both parties to cancel under certain circumstances (for example, with 30 days written notice). Along with a termination provision, you want a survival provision that states certain clauses will continue to be in effect after termination. Survival commonly covers confidentiality/non-compete provisions and record-keeping obligations. (We discuss confidentiality/non-compete clauses earlier in this chapter.)

Cross-termination clauses are necessary in situations in which the parties have multiple agreements. For example, it’s common to set up a joint venture and then for the individual partners to sign agreements (usually as customers or suppliers) with the JV. Well, what happens to those other agreements if the JV contract is terminated? The more complex the web of contracts becomes, the more crucial it is to ask, “If contract A is terminated, what do I want to happen to contracts B through F?” Work with your attorney to game out these scenarios and draft the appropriate cross-termination provisions.