Also known as:rights to terminate · termination right · right of termination
Written by attorneys — see sources below.
A right that permits a party to end an agreement, estate, or other legal relationship upon the occurrence of specified conditions or breach by the other party. The remedy requires the holder to take affirmative steps such as vacating the premises or providing notice to effect termination. It is distinct from rescission because it responds to a breach arising under the contract itself rather than an independent duty.
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Cases
Uniform Acts
Restatements
How its tested
Common Examples
6
Tenant Vacates After Mold Discovery
Stone Peak leased a training facility from Pine Play. After mold appeared in the locker rooms, the team removed its equipment and vacated mid-season. Its manager telephoned and emailed Pine Play stating the lease must end because of the health hazard. The actions satisfied the requirements for exercising the right because the tenant vacated and gave the landlord direct knowledge of the decision and reason.
Merger Financing Deadline Passes
Trans Union entered a merger agreement with a Marmon affiliate. The purchaser had until October 10 to obtain satisfactory financing or it could end the deal. No financing commitment arrived by the deadline. The purchaser therefore exercised its contractual right and terminated the merger agreement without liability.
Smith v. Van GorkomDel. Supr., 488 A.2d 858, 872 (1985)
Trans Union Corporation was a publicly traded diversified holding company whose principal earnings came from its railcar leasing business. During the late 1970s the company generated hundreds of millions of dollars in annual cash flow but faced difficulty utilizing accumulating investment tax credits because accelerated depreciation had reduced available taxable income. In the summer of 1980 Chairman and Chief Executive Officer Jerome W. Van Gorkom concluded that Congress would not make the credits refundable and began exploring a sale of the company.
On September 13, 1980, Van Gorkom met privately with corporate takeover specialist Jay A. Pritzker at the latter's home. Without prior consultation with the Board or senior management except the controller, Van Gorkom proposed a cash-out merger at $55 per share, a figure he had selected solely because it appeared feasible for a leveraged buyout financed by Trans Union's projected cash flow and asset sales. Pritzker expressed interest and insisted that the Board act within three days.
Van Gorkom called a special Board meeting for noon on September 20 with only two hours' prior notice to most directors. The ten-member Board, consisting of five inside and five outside directors, received a twenty-minute oral presentation from Van Gorkom but no copies of the proposed merger agreement and no independent valuation study. After roughly two hours of discussion the Board approved the merger agreement with Pritzker's New T Company, a wholly owned subsidiary of Marmon Group, Inc.
Following public announcement of the agreement, senior management expressed strong opposition. On October 8 and 10 the Board approved amendments that permitted Trans Union to solicit competing offers during a market-test period ending February 10, 1981, although the amendments imposed strict conditions on any withdrawal from the Pritzker deal. Salomon Brothers was retained to seek alternative bids; only General Electric Credit Corporation showed sustained interest, but it declined to proceed without an extension of the February 10 deadline that Pritzker refused to grant.
On February 10, 1981, Trans Union stockholders approved the merger by a vote of 69.9 percent in favor. Plaintiffs, a class of shareholders, had filed suit in December 1980 seeking rescission or damages. After trial the Court of Chancery entered judgment for the defendant directors on July 6, 1982, and the plaintiffs appealed to the Delaware Supreme Court.
Landlord Ends Tenancy After Complaint
A month-to-month tenant reported housing code violations to authorities. The landlord then served notice to end the tenancy. The tenant argued the termination was retaliatory. The court examined whether the landlord's right to terminate remained absolute or was limited by the tenant's protected activity.
Edwards v. Habib397 F.2d 687, 699 (D.C. Cir. 1968)
In March 1965, Mrs. Yvonne Edwards rented housing property from Nathan Habib on a month-to-month basis. Shortly thereafter she complained to the Department of Licenses and Inspections of sanitary code violations which her landlord had failed to remedy. In the course of the ensuing inspection, more than 40 such violations were discovered which the Department ordered the landlord to correct.
Habib then gave Mrs. Edwards a 30-day statutory notice to vacate and obtained a default judgment for possession of the premises. Mrs. Edwards promptly moved to reopen this judgment, alleging excusable neglect for the default and also alleging as a defense that the notice to quit was given in retaliation for her complaints to the housing authorities. Judge Greene, sitting on motions in the Court of General Sessions, set aside the default judgment and concluded that a retaliatory motive, if proved, would constitute a defense.
At the trial itself, however, a different judge deemed evidence of retaliatory motive irrelevant and directed a verdict for the landlord. Mrs. Edwards then appealed to the District of Columbia Court of Appeals, which affirmed the judgment of the trial court.
We granted appellant leave to appeal that decision to this court. The case thus presented the question of whether retaliatory eviction could be barred as a defense.
Spousal Notification Requirement
Pennsylvania required a married woman seeking an abortion to notify her spouse. The provision gave the woman a right to terminate the pregnancy but imposed an additional procedural step. The Court assessed whether the notification rule unduly burdened that right.
Planned Parenthood of Southeastern Pennsylvania v. Casey505 U.S. 833, 112 S. Ct. 2791, 120 L. Ed. 2d 674 (1992)
The Pennsylvania Abortion Control Act of 1982, as amended in 1988 and 1989, established several requirements governing the performance of abortions within the Commonwealth.
The Act required a woman seeking an abortion to provide informed consent after receiving specific information from a physician or counselor at least twenty-four hours before the procedure. It mandated that a minor obtain the informed consent of one parent, subject to a judicial bypass option. It further required a married woman to sign a statement confirming that she had notified her husband of her planned abortion, unless certain exceptions applied. The Act also imposed reporting obligations on facilities providing abortion services and defined a medical emergency exception to the various requirements.
Before any of these provisions took effect, the petitioners brought suit in the United States District Court for the Eastern District of Pennsylvania. The petitioners were five abortion clinics and one physician representing himself as well as a class of physicians who provide abortion services. They sought declaratory and injunctive relief and challenged each provision as unconstitutional on its face.
The District Court entered a preliminary injunction. After conducting a three-day bench trial, the District Court held all the provisions unconstitutional and entered a permanent injunction against their enforcement by Pennsylvania.
The Court of Appeals for the Third Circuit affirmed in part and reversed in part. It adopted the District Court's factual findings and legal analysis except with respect to the spousal notification requirement. The Court of Appeals upheld the spousal notification requirement as constitutional and applied the undue burden standard in evaluating the provisions.
The Supreme Court granted certiorari to consider the constitutionality of the challenged provisions of the Pennsylvania statute.
State Criminal Abortion Ban
Texas criminalized most abortions. A woman challenged the statute claiming it violated her right to terminate a pregnancy. The Court evaluated whether the Constitution protected that right against state prohibition in the early stages of pregnancy.
Roe v. Wade410 U.S. 113 (1973)
In March 1970, Jane Roe, a single woman residing in Dallas County, Texas, instituted a federal action against the District Attorney of the county. She sought a declaratory judgment that the Texas criminal abortion statutes were unconstitutional on their face. She also sought an injunction restraining enforcement of the statutes.
Roe alleged that she was unmarried and pregnant. She wished to terminate her pregnancy by an abortion performed by a competent licensed physician under safe clinical conditions. She was unable to obtain a legal abortion in Texas because her life did not appear to be threatened by continuation of the pregnancy. She could not afford to travel to another jurisdiction to secure a legal abortion.
James Hubert Hallford, a licensed physician, sought and was granted leave to intervene in Roe's action. In his complaint he alleged that he had been arrested previously for violations of the Texas abortion statutes. Two such prosecutions were pending against him in the Criminal District Court of Dallas County. He described conditions of patients who came to him seeking abortions. He claimed that for many cases he was unable to determine whether they fell within or outside the exception recognized by Article 1196 of the Texas Penal Code.
John and Mary Doe, a married couple, filed a companion complaint also naming the District Attorney as defendant. The Does alleged that they were a childless couple. Mrs. Doe was suffering from a neural-chemical disorder. Her physician had advised her to avoid pregnancy until her condition materially improved. She had discontinued use of birth control pills pursuant to medical advice. If she should become pregnant she would want to terminate the pregnancy by an abortion performed by a competent licensed physician under safe clinical conditions.
The two actions were consolidated and heard together by a duly convened three-judge district court for the Northern District of Texas. Upon the filing of affidavits, motions were made for dismissal and for summary judgment. The court held that Roe and members of her class and Dr. Hallford had standing to sue and presented justiciable controversies. The Does had failed to allege facts sufficient to state a present controversy and did not have standing. It concluded that the Texas criminal abortion statutes were void on their face. The court dismissed the Does' complaint while denying injunctive relief.
The plaintiffs Roe and Doe and the intervenor Hallford appealed to the Supreme Court from that part of the District Court's judgment denying the injunction. The defendant District Attorney cross-appealed from the grant of declaratory relief. Both sides also took protective appeals to the United States Court of Appeals for the Fifth Circuit. That court ordered the appeals held in abeyance pending decision by the Supreme Court.
State Gestational Age Limit
Mississippi enacted a law banning most abortions after fifteen weeks. A clinic challenged the statute as an unconstitutional restriction on the right to terminate a pregnancy. The Court considered whether the Constitution continued to protect that right against state regulation.
Dobbs v. Jackson Women’s Health Organization142 S. Ct. 2228 (2022)
Mississippi's Gestational Age Act provides that, except in a medical emergency or in the case of a severe fetal abnormality, a person shall not intentionally or knowingly perform or induce an abortion of an unborn human being if the probable gestational age of the unborn human being has been determined to be greater than fifteen weeks. The Mississippi Legislature made findings about prenatal development and the risks and nature of dilation-and-evacuation procedures used after 15 weeks.
Jackson Women's Health Organization, an abortion clinic, and one of its doctors filed suit in Federal District Court challenging the statute. They alleged that the law violated this Court's precedents establishing a constitutional right to abortion. The District Court granted summary judgment for the respondents and permanently enjoined enforcement of the law.
The Fifth Circuit affirmed the District Court's decision. Petitioners defended the statute before this Court, arguing that Roe and Casey were wrongly decided. The Supreme Court granted certiorari to consider whether all pre-viability prohibitions are unconstitutional and whether Roe and Casey should be overruled.
What steps must a tenant take to exercise the right to terminate a lease under the Restatement?
The tenant must vacate the property while the right exists, follow any lease provisions on termination method, and if none exist, take reasonable steps to inform the landlord of the decision and reason. These requirements ensure the landlord receives clear notice that the lease has ended.
Supporting sources
How does the right to terminate differ from rescission?
The right to terminate ends contractual relations when the other party breaches a duty arising under the contract. Rescission applies when the breach involves a duty independent of the contract. The distinction determines available remedies and whether restitution is required.
Can a power of termination in a deed be assigned to a third party?
Under traditional common law a power of termination is not alienable inter vivos. It may pass by descent or devise but an attempted assignment conveys nothing and leaves the assignee without standing to enforce the right.
Supporting sources
Does a merger automatically trigger an anti-assignment clause that allows lease termination?
Statutory merger provisions vest contract rights in the survivor without a transfer. If the clause prohibits only transfers the merger does not activate the termination right. The landlord may still argue the change in tenant identity breaches the clause if the language is broad enough.
Supporting sources
When does a conditional interconnection approval satisfy a partnership dissolution trigger?
The approval must match the economic arrangement the partners contemplated. A heavily conditioned or revocable document that substantially alters project costs and retains a termination right does not prevent dissolution under the agreement.
Supporting sources
her pregnancy in its early stages, Roe v. Wade , 410 U. S. 113 (1973), that definition of liberty is still questioned. At issue in these cases are five provisions of the Pennsylvania…
right
. In a related transaction, Trans Union has agreed to sell…
Business Associations Agency and PartnershipDissolution · General partnerships, limited partnerships, or limited liability partnershipsUBEFoundational