When your business counterparty fails to perform under your contract, your instinct may be to terminate immediately and move on. That instinct is understandable, but acting on it without following the proper steps can be a costly mistake. Most well-drafted commercial contracts include notice requirements and cure periods — procedural conditions that must be satisfied before you can lawfully terminate the agreement or declare a default. Bypassing these requirements, even when the underlying breach is clear, can expose you to claims that you wrongfully terminated the contract.
The legal principle is straightforward: termination of a commercial contract is a serious act with significant consequences for both parties. Contract law and commercial practice generally require the non-breaching party to give the breaching party fair warning — formal notice that they have failed — and a reasonable opportunity to fix the problem before the contract is ended. This requirement reflects the policy preference for contract performance over termination and gives breaching parties a meaningful chance to correct failures rather than being immediately cut off.
What Is a Cure Period?
A cure period is the contractually specified window of time within which a breaching party can remedy their failure and thereby avoid the breach ripening into a basis for termination. Cure periods are almost universally found in commercial contracts of any sophistication — services agreements, supply agreements, software licenses, distribution agreements, joint ventures, and leases all typically include them. The length varies considerably: thirty days is common for general contract breaches; shorter periods, such as five to ten business days, often apply to payment defaults; and some breaches — like insolvency events or criminal conduct — may carry no cure period at all.
During the cure period, the breaching party has the right and the obligation to remedy the specified failure. If they successfully cure — if the payment is made, the defective goods are replaced, the required insurance is reinstated, the non-conforming specification is corrected — the breach is typically treated as resolved and the non-breaching party cannot terminate on that basis. The cure provision converts what would otherwise be an immediate termination right into a more graduated process that preserves the contract when the failure is correctable.
Not all failures are curable, and most contracts acknowledge this by distinguishing between curable and non-curable breaches. A payment default is quintessentially curable — the payment can be made late, with whatever interest accrued. Delivery of non-conforming goods is typically curable, depending on timing constraints. But some failures cannot be undone: disclosure of confidential information to a competitor, violation of an exclusivity obligation that has allowed a competing product to be launched, or fraudulent conduct cannot be reversed after the fact. Contracts typically treat these non-curable breaches as immediate events of default.
Notice Requirements: The Procedural Prerequisite
Before the cure period even begins, most contracts require the non-breaching party to provide written notice of the breach to the breaching party. This notice requirement serves multiple purposes: it formally puts the breaching party on notice of the specific failure (so they know what to cure), it creates a documented record of when the breach was identified and communicated, and it starts the cure clock running in an unambiguous way. The notice marks the beginning of the cure period and, if cure is not achieved, establishes the timeline for the non-breaching party’s subsequent termination right.
Notice requirements are typically technical and must be followed precisely. Contracts specify the form of notice (written, email, certified mail, overnight courier), the method of delivery, and the address or addresses to which notice must be sent. Courts have held that notices sent to the wrong address, in the wrong form, or through unauthorized channels do not satisfy contractual notice requirements — even when the breaching party actually received them by other means. This seems harsh, but the principle is that parties who have agreed to specific notice mechanisms are entitled to rely on those mechanisms, and informal notice that happens to reach the right person does not necessarily satisfy the contractual requirement.
The content of a cure notice is also important. The notice should identify the specific breach clearly and with enough detail that the breaching party can understand what they are required to cure. A vague notice that says only ‘you are in breach of our agreement’ provides insufficient guidance and may be challenged as failing to properly trigger the cure period. A proper notice identifies the provision breached, the specific conduct or failure that constitutes the breach, and a statement that the party will exercise termination rights if the breach is not cured within the contractual period.
Some contracts specify that notice must be given promptly after discovery of the breach. If the non-breaching party discovers a failure and waits six months before giving notice, that delay may itself be treated as a waiver of the right to terminate on that basis, or may undermine the claim that the breach was in fact serious. This is another reason to act promptly and methodically when you discover a potential breach: document it immediately, assess whether the contract’s notice and cure provisions apply, and give proper notice without unnecessary delay.
What Constitutes Cure?
When the breaching party attempts to cure within the specified period, the question arises of what constitutes a valid cure. The standard is generally that cure must fully remedy the specified breach — not merely address it partially or promise to fix it in the future. A cure that only partially resolves the problem may not be sufficient, and the non-breaching party may have the right to terminate once the cure period expires if the breach has not been fully remedied.
The concept of full cure is straightforward for some types of failures. A payment default is cured when the overdue amount, plus any applicable interest, is paid in full. A failure to deliver required documentation is cured when the conforming documentation is actually delivered. But for performance failures — where goods are non-conforming, services have not met specifications, or ongoing obligations have been improperly executed — the line between adequate and inadequate cure can be more contested.
Courts generally require that the cure address the specific failure identified in the notice, not a related but different failure, and that it bring the breaching party into compliance with the contract going forward. A software vendor who patches a bug identified in the cure notice but has other outstanding non-conformities has not fully cured the default if the non-conformities constitute a continuing breach of the contract’s specifications. The non-breaching party may need to give additional notices for the uncured issues.
When the cure period expires without full cure, the non-breaching party’s termination right typically becomes immediately exercisable. There is generally no obligation to extend additional time beyond what the contract specifies, though as a practical matter, parties in ongoing business relationships often negotiate informally for additional time. If you agree to extend the cure period, document that extension in writing. An oral agreement to extend may be argued to be unenforceable under the contract’s modification requirements, or it may be argued to waive your termination right without adequate protection.
The Risk of Skipping These Steps
The consequences of failing to follow notice and cure requirements can be severe. If you terminate a contract without giving the required notice and cure opportunity, you may be found to have wrongfully terminated — essentially, you have committed your own material breach by ending the contract without legal justification. The roles reverse: the party who actually failed to perform initially may now have a claim against you for the damages caused by your wrongful termination.
Wrongful termination damages can be substantial. The party you terminated may be entitled to recover lost profits, costs incurred in reliance on the contract, costs of transitioning to alternative arrangements, and in some cases consequential damages flowing from the disruption caused by the termination. In a long-term supply agreement or services contract, these damages can easily exceed the harm that the original breach caused. The procedural step of giving notice and waiting for the cure period costs little; the cost of skipping it can be enormous.
Courts also look unfavorably on parties who use technical breaches or minor failures as pretextual grounds for terminating a contract they simply want to exit. If the evidence suggests that you terminated primarily for your own economic reasons — because the deal became unfavorable, because a better alternative emerged, or because you wanted to escape your obligations — and that you used a minor breach as cover, courts will scrutinize your conduct closely and may find both that the breach was immaterial and that your termination was improper.
Implied Notice and Cure Rights Under the UCC
For contracts involving the sale of goods, the Uniform Commercial Code provides statutory cure rights that apply even when the contract does not specify them. Under the UCC, a seller who has tendered non-conforming goods generally has the right to cure by making a conforming delivery within the time allowed for performance under the contract. Even after the contract’s performance time has expired, a seller who had reasonable grounds to believe the non-conforming tender would be accepted may be allowed a further reasonable time to cure.
The UCC cure right operates somewhat differently from a contractual cure period because it is the seller’s right, not the buyer’s obligation to provide notice. However, the practical effect is similar: buyers of goods who want to reject non-conforming tender must allow the seller to cure before treating the failure as a final, non-curable breach entitling the buyer to terminate and seek full damages. Premature rejection followed by a refusal to allow cure may expose the buyer to a claim that they wrongfully rejected conforming goods.
Drafting Effective Notice and Cure Provisions
When you are drafting or reviewing commercial contracts, give careful attention to the notice and cure provisions. The cure period should be calibrated to the realistic time needed to actually fix the types of failures that might occur. A thirty-day cure period may be appropriate for a complex performance failure but unnecessarily long for a simple payment default where five to ten business days is standard. Conversely, a five-day cure period for a complex deliverable failure may be too short to be practically meaningful and could be challenged as unreasonable.
Consider including a tiered cure structure for recurring breaches. Some contracts provide that while a first breach may be cured within the standard period, a second substantially similar breach within a specified period is not curable and triggers an immediate right to terminate. This prevents the cure mechanism from being used repeatedly to avoid consequences for the same type of failure and protects the non-breaching party from a counterparty who repeatedly fails and repeatedly cures.
Ensure your notice provisions specify all of the logistics clearly: the required form of notice, the authorized delivery methods, the specific address and addressee for notices, and whether email is permitted. Keep the notice information in your contracts current — if the other party changes their address or key personnel, update the notice section in writing. A notice sent to a departed employee at an old address may not start the cure clock even if the company eventually learns about it through other channels.