(a) A party may not terminate a contract except on the happening of an agreed event such as the expiration of the stated durationterm, unless the party gives reasonable notification of termination to the other party.

(b) An access contract may be terminated without notice. However, if the access contract pertains to a resource containing information owned by the licensee, termination by the licensor other than on the happening of an agreed event requires reasonable notification to the licensee.

(c) A term dispensing with notificiation required under this section is invalid if its operation would be unconscionable. However, a term specifying standards for the nature and timing of notification is enforceable if the standards are not manifestly unreasonable.

Uniform Law Source: Section 2-309(c)

Committee Action: Reviewed without substantive change.

1. Termination in General. Termination involves an end to the contract for reasons other than breach of the contract. The rules stated here do not apply to cancellation for breach

2. Termination on the Happening of an Event. For termination based on an agreed event (e.g., the end of the stated license term), no notice is required. This corresponds to current Article 2 and common law.

2. Notice in Other Cases. If termination occur based on a judgment of one party (such as an "at will termination") notice must be given of the termination. The notice must be reasonable. What is reasonable varies with the circumstances. Thus, for example, where the reason for termination involves criminal conduct or a desire to prevent harmful acts by the other party, notice at the time of termination may suffice. In other, less exigent circumstances, advance notice of some reasonable time is needed. As indicated in subsection (c), the notice requirement may be waived or the terms and timing of notice specified by agreement.

This section requires "giving" notice. A requirement that notice be received would create potential uncertainty and the party here is merely exercising a contractual right. The uncertainty is especially important in online or Internet situations where the current or actual location of many users may be difficult or impossible to ascertain.

3. Access Contracts. Under subsection (b), termination of access contracts does not require notice. In these cases, the contractual rights granted to the licensee are to access a resource owned by the licensor. When the contract terminates, the access privilege also terminates. This is consistent with current law in licenses of this type. See Ticketron Ltd. Partnership v. Flip Side, Inc., No. 92-C-0911, 1993 WESTLAW 214164 (ND Ill. June 17, 1993). In fact, in many cases, unless the contract otherwise provides, a license to use resources or property of the licensor is subject to termination at will without notice. The no-notice rule of subsection (b) is especially important in modern access contract situations where thousands of licensees may be involved and addresses may not be available. Of course, the concept of termination refers to events not associated with breach. Where the reason to end the access is a breach, the section on discontinuing access controls. See Section 2B-714.

This section provides a limited exception to the common law rule in cases where the access contract involves information provided to the licensor and owned by the licensee. The language change in this draft was intended to clarify the circumstances under which this notice requirement occurs. What is meant here is ownership of the information, not of the other property to which the information may refer. Thus, for example, customer transactional information is typically not owned by the customer to whom it refers and the mere fact that customer data is included in the access material does not trigger the exception.

4. Contract Modification. Subsection (c) sets out standards for measuring the validity of contract provisions relating to time, place and method of termination notice. Current Article 2 allows the dispensing with notice if the term is not unconscionable. Subsection (c) retains that concept. In addition, Article 2B refers to concepts set out in Article 9-501 allowing standards to be set for notification. As in Article 9, that standard creates substantial room for effective exercise of contract freedom.