Wednesday, December 22, 2010


Contract performance is excused when the Contract has been terminated or the contract has lapsed by coming to the end of its term. If there are actions that need to be performed or rights and liabilities that need to continue after that point, the parties must agree to that.  In most contracts the way that is done is through the use of a “survival” clause where the parties show their intent for those obligations to continue and still be enforceable.

For example a simple survival provision could look like this:
The following Sections of this Contract will survive the termination of expiration of this Contract and will remain in effect until fulfilled:
  1. Section entitled “Taxes”
  2. Section entitled “Payment”
  3. Section entitled “Warranties”
  4. Section entitled “Indemnification”
  5. Section entitled “Limitation of Liability”
  6. Section entitled “Choice of Laws and Forum”
  7. Section entitled “Order of Precedence”.

The key in writing any survival provision is to think about what may need to be done after the agreement has ended. You can see from the above list, most deal with either making sure protection remains against third party claims (as those don’t extinguish until the statute of limitations for those types of claims has expired) or ensuring that the parties get what the other party has promised.
  • Taxes would be to protect against tax liability if the Supplier failed to pay taxes they collected from the Buyer.
  • Suppliers always want to ensure that Buyer’s responsibility for payment doesn’t stop.
  • Warranties would include both the warranties to protect against third party claims and any contract warranties such as a warranty against defects in material and workmanship or warranties to correct problems such as in software warranties.
  • Indemnification is to protect against tort and IP infringement claims by third parties that could be brought several years after the agreement has ended.
  • If a Supplier is going to continue to be liable, they will want any limits on liability to survive.
  • Choice of Laws and Forum would be asked to survive in the event of a dispute so that it would be heard where the parties had agreed.
  • Order of precedence would be included so the interpretation of the contract after the agreement has ended would be interpreted in the same manner as during the contract period. 

I’ve seen broad “catch all” survival provision such as “All terms that by their nature should survive the termination or expiration of the agreement shall survive.” I don’t like these for several reasons. First, the parties can easily disagree about whether the nature of the term should or shouldn’t survive.  Second, if a dispute arises courts always look to at what's in the "four corners" of the agreement to understand the intent of the parties. The best way to demonstrate what the parties intended is to clearly describe it in the agreement.


  1. Dear Sir,

    In many contracts, customers want certain clauses to survive perpetually.

    From service provider perspective, according to me, this is incorrect and that there has to be some time limit (like 3 years) for surviva.

    Would like to know your thoughts on this.

  2. There are two types of claims a party needs to be concerned with. One is contractual liability. The other is third party liability. In most countries there are legla statute of limitations. What a legal statute of limitations does is create a legal cut off period after which claims may not be brought. Claims made within that period will continue until the dispute is resolved by the agreed method in the contract. This means that for certain clauses having them be perpetual provides no real value when there are statute of limitations laws as the claims those clauses were there to protect against would no longer be able to be made.

    For example, a third party that is injured in New York state has six years after the cause of action in which to make a claim. In New York, a claim under a contract has 2 years after the completion of all obligations. If you had a warranty that was 10 years, after that warranty was complete there would be 2 year from that to file a contract claim. After that no claim under the contract could be brought.

    For some liabilities such as product liabilities both the Supplier and the Buyer (if they resold it to a third party) can be potentially liable over the life of the product, being excused on individual claims only after the individual's claim rights have expired.

    Based on this a simple formula such as three years would not work for many buyers as they could still be liable for the supplier's actions under the theory of agency. All these rights and concepts will vary of course by the laws of the location stated and both for both applicable contract law and jurisdiction.

  3. Should the survival section itself be listed as a surviving section?

  4. Survival clauses establish what provisions survive the specific event of termination or expiration. For those clause that survive there could be a specific term in which it is enforceable such as a warranty period. Those that don't have a specific term agreed to in the contract, will survive until the applicable statute of limitations expires. There is need to include the survival clause in the list of those clauses that survive. It has done its job establishing what survives and nothing would survive the lapse of the statute of limitations provides no additional value as you no longer have a legal right to make a claim.