Contract Glossary
Key Person Clause
Definition
A contract provision that gives one party the right to terminate or renegotiate the agreement if a specific individual, the 'key person', leaves, dies, becomes incapacitated, or is no longer actively involved in performing the contract. Common in consulting, creative, and professional services agreements where the client hired the firm specifically for access to a particular person's expertise.
In Practice
You hire a boutique law firm specifically because a senior partner specializes in cryptocurrency regulation. Your retainer agreement includes a key person clause naming that partner. Six months in, the partner leaves to join a competing firm. The key person clause gives you the right to terminate the retainer without penalty, because you hired the firm for that specific person's expertise, and the firm can no longer deliver it.
Example Clause
The Client acknowledges that [Name] ('Key Person') is essential to the performance of Services under this Agreement. If the Key Person ceases to be actively involved in providing Services for any reason, including resignation, termination, death, or disability, the Client may terminate this Agreement upon fifteen (15) days' written notice without incurring any termination fee or early termination penalty.
Common in these contract types
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Frequently asked questions
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