Why Your Contract Cancellation Clause Should Be Based On Hours, Not Weeks

Unfortunately, some of the lessons you learn in the contracting business come from situations where you have to learn the hard way.  The hard way generally means you were dealing with someone who took advantage of a situation that caused you some major inconvenience.  Once these situations occur, of course you do what you can to prevent them from happening again.

Most contracts include a clause that allows them to be terminated early.  So even though your contract may be written up to end on a certain date, every contract I have ever seen gives the client the ability to end the contract early.  Normally there is a paragraph that says something to the effect that the client can end the contract early by providing x number of days’ notice.

In one occasion with a contractor that we had primarily working from home, we received a notice from the client that they were going to be ending the contract early and they were giving us the required notice.  Since this contract was not very long to begin with, the amount of notice they were required to give us was two weeks.  So if we were given notice on Monday, February 10, the contractors last day would be Friday, February 21.  The client gave the notice because they had just hired someone and decided to pass the future work off to this person.  But although they gave a 2-week notice, they were no longer sending work for the contractor to perform.

However, the contractor understood a 2-week notice to mean two more weeks of paid hours, so the following week, submitted a timesheet for 40 hours.  Unfortunately, the client said they would not approve the timesheet because the contractor did not actually do any work.  I hope you see the technicality here.  I believe you will not run into this type of person too often.  But the point is, if you change the cancellation clause from providing 2-week’s notice to providing 80 hours of billable work notice, you have a much lower likelihood of this ever happening to you.

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David Kushan

David Kushan is the President of Healthcare IS and has spent the last 18 years of his career working in the Healthcare Information Technology industry assisting over 120 healthcare organizations nationwide. Visit www.HealthcareIS.com for Dave’s company blog, articles, podcasts and more.

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