.png)
Subpart “.1” to our last article on contracts. Again, contract awareness is important if not critical learning. In this article we will focus on the concepts and clauses for “term” and “termination”, which were intentionally saved for a more focused explanation.
“TERM” is relevant to all contracts and defines the duration of the agreement or how long the contract remains in effect and binding on the parties. If you are an athlete, for example, this concept can be critical as it relates to your ability to search out a new agent or new team, or for how long you are tied toa specific brand or collective. The related topics of “renewal” and “termination” must be read in the contract in conjunction with “term” as either may provide “outs” or obligations that impact your ability to pivot.
A typical “Term” might read like this: This Agreement shall become effective on the Effective Date and shall continue in effect for 1 (one) year unless otherwise earlier terminated in accordance with this Section. So, you are bound for 1 year unless the “otherwise…” kicks in, which is why your termination rights become so important.
“RENEWAL” refers to the idea of extending the contract beyond the initial stated term (1year in the example above). The contract may not speak to renewal or may include the concept of “auto renewal” sometimes referred to as “evergreen”, which means that absent a notice to terminate issued from 1 party to the other, the contract will automatically renew without further action by either party and typically for the same duration as the original term (in our example 1 year). Thus, keeping track of the notice requirement can also be critical if you intend to terminate the contract at the expiration of the initial term (or any renewal term).
“TERMINATION” - the end of the contract! A typical provision might read like this: This Agreement will automatically renew for additional one (1) year terms unless earlier terminated pursuant to this Agreement’s express provisions or either Party gives the other Party written notice of non-renewal at least 30 days prior to the expiration of the then-current term (each a “Renewal Term” and together with the Initial Term, the “Term”). Now, there may also be some standard (“boilerplate”) legal items included in the case that a party ceases to do business, files bankruptcy, or is found to have engaged in illegal conduct. There are also items that “survive” termination, which means that even though the contract ends these items, typically non-services/deliverables and more “legal” terms, remain applicable. Survival may include such things as confidentiality, law/venue, the right to be paid (or obligation to pay) money owed, limitation on liability, etc.
WHY YOU SHOULD CARE – As NIL evolves, particularly with the looming reality of revenue sharing, unrestricted transfer portal, direct pay, bad actors, protecting your IP, flexibility v. commitment, etc., you want to know your rights and obligations and, therefore, know and understand what you are signing!
We are here to help!
ABOUT THE AUTHORS:
NILegally Speaking™ is written by PowerNIL/Ken Feinberg, attorney, in collaboration with other expert attorneys focused on employment, labor, contract, and intellectual property law.
ken@powernil.com www.powernil.com