A survival clause in contract outlines the provisions and terms that will remain in effect after the contract expires or is terminated. This clause is included in many types of contracts. Some of the most common obligations included in a survival clause include:. After meeting the core obligations, a survival clause can include more specific details relating to the individual agreement, including the continuance of certain obligations, warranties, and representations.
Alternative forms of language allow for more adaptation to the complexity of survival clauses. When a contract includes alternative language, you can outline the representations, obligations, and warranties in a more general way. If needed, these sections can include enumerated lists that can outlast the contract if it is terminated or expires. There are contract terms that must, due to their nature, survive termination of the contract because they contemplate possible performance after contract termination.
Indemnification provisions or post-closing proration adjustments in real estate purchase agreements are among the provisions that need to survive. Often, the parties agree on what they intended, move forward in good faith, and the issue never arises.
But occasionally, a party uses that omission to justify their post-termination violation of those provisions. Therefore, any time a contract contains a post-termination obligation, the related contract provision should survive termination for the duration of the obligation.
For instance, many contracts include confidentiality, non-competition, or non-solicitation provisions that continue for a year or more after the contractual relationship ends. The lack of survival language may prevent a finding that the aggrieved party has a clear legal right, since the contract may be far from clear.
Most real estate and other management agreements include post-termination requirements. Any time there are post-termination obligations, the related contract provision should survive termination for the duration of the obligations.
Many contracts include indemnification language. If the indemnification language covers only breaches of the contract, a party might not want it to survive termination, since that would allow the other party to file a claim for breach of the terminated contract. However, most indemnification provisions cover tort claims or allocate risk for third-party claims. Since a party might not become aware of these claims until after the contract termination, those indemnification provisions should survive termination.
That way, a party faced with a claim months after contract termination still can pursue indemnification from the other party. Also, sometimes, parties purchase contractual liability insurance that covers claims under indemnification provisions. Parties with this insurance may want the indemnification to continue post-termination because if the indemnification obligation ends when the contract terminates, any insurance coverage is likely to end.
The following provisions shall continue in force after termination [clause A: Indemnities, clause B: Limitations of Liability, clause C: Confidentiality], and any other clause required to give effect to the intention of the parties shall continue in effect and be binding upon the parties.
If Survival of Terms clauses are made to apply to primarily obligations set out under the contract, it can create real confusion as to what has been agreed to apply post termination. We help our SMEs with business contracts and straightening up contract clauses so that they have the legal effect that they want them to.
Looking for a commercial contract solicitor for help with a contract? Survival of Terms Clauses can change that. They do not end with the contract. Those obligations generally fall within one of the following three categories:. For example, in a construction context, upon termination of the contract by either party, the contractor is relieved of its primary obligation to carry out and complete the works. That compensation will usually comprise any additional cost incurred by the owner in completing the works that is over and above the contract price.
Whether or not obligations in the second or third category survive termination is a question of construction and, therefore, will depend on the intention actual or implied of the parties in each particular case.
Rights that have unconditionally accrued prior to termination continue to have effect after termination. Where the contract has been terminated for breach, even the defaulting party may enforce rights that have unconditionally accrued in its favour. A common example of this right in a construction context is the recovery of progress payments or instalments due under the contract.
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