Legal Definitions - cancellation clause

A cancellation clause is a part of a contract that allows one or both parties to cancel their obligations under certain conditions. It is also known as a termination clause.

For example, a cancellation clause may allow a buyer to cancel a purchase agreement if the seller fails to deliver the goods on time. Or, it may allow a landlord to cancel a lease agreement if the tenant fails to pay rent for a certain number of months.

These examples illustrate how a cancellation clause can protect the interests of both parties in a contract. It gives them the flexibility to end the agreement if certain conditions are not met, without having to go through a lengthy legal process.