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How to write your Service Termination and Settlement Agreement
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Use cases for this template
PixelForge Studios winds down a web project with Harbor Outfitters
The Challenge
When a redesign stalled, Harbor Outfitters sought to end services without burning bridges, while PixelForge worried about IP rights, costs incurred, and keeping the legal process predictable around the termination date and 30-day migration window.
The Solution
They adopted a standard termination and settlement template to define a fair exchange of final payment for a worldwide license and an "as is" file transfer, and they used Proposal Kit's AI Writer only to produce a migration plan, an asset inventory report, and a completion letter to document legal obligations and keep both parties legally protected.
The Implementation
Managers set a clear schedule, designated a customer agent, limited server access, and agreed that inquiries would be handled promptly; Proposal Kit's line-item quoting was used to price any pre-approved reimbursement for transfer-related expenses, and document creation features assembled checklists that advised teams on risks and reporting.
The Outcome
Files were moved on time, releases curtailed future complaints or litigation, non-disparagement preserved reputation, and the relationship ended professionally with predictable costs and no penalties.
NimbusLedger exits hosting for Crestline Logistics after a security audit
The Challenge
A third-party audit triggered Crestline's decision to migrate rapidly, raising concerns about confidentiality, statutory claims tied to data handling, and whether "as is" delivery would expose either party to disputes.
The Solution
The parties executed the template agreement to fix the termination date, cooperation window, and reimbursement mechanics, while Proposal Kit's AI Writer generated a risk assessment memo, a data offboarding checklist, and a manager briefing that advised teams on least-privilege access and audit trails.
The Implementation
They cataloged non-transferable components, staged backups, logged inquiries, and used Proposal Kit's line-item quoting to estimate export and validation tasks, with document creation producing a concise schedule and a handover report to maintain continuity.
The Outcome
The migration was completed without disruption, the releases had limited exposure, both sides remained legally protected, and the organisation preserved a constructive relationship for potential future collaborations.
BrightQuarry Marketing and LumaDrip reset expectations and parted amicably
The Challenge
Scope creep and shifting priorities left LumaDrip feeling treated unfairly about deliverables, while BrightQuarry faced rising risks and costs; both wanted a fair exit that avoided dismissal-style drama and protected managers from ongoing complaints.
The Solution
They used the settlement template to trade final payment for IP rights and cooperation and turned to Proposal Kit's AI Writer for a transition proposal, a schedule of remaining assets, and an issues summary report, keeping AI out of the contract text and focused on supporting documents only.
The Implementation
Negotiators documented responsibilities, agreed on inquiry limits, and established a reimbursement policy with line-item quoting for any assistance, while document creation assembled checklists that advised team leads on completion milestones and reporting discipline.
The Outcome
The parties executed releases, avoided litigation, maintained non-disparagement, and closed out on time, leaving room for a future partnership with clearer expectations and a healthier business relationship.
Abstract
This agreement provides a clear legal process to wind down a services relationship while settling all legal obligations between the parties. It sets a termination date as the date of signing and creates a short schedule to exit: the customer must complete migration within 30 days, notify the company upon completion, and then all hosting and server access will end. In a fair exchange, the company grants a worldwide license to use, modify, or sell all delivered work and source code (except third-party items), and accepts a final payment as is. This reduces risks, penalties, and costs incurred that often arise when projects are terminated without a plan.
The settlement centers on practical assistance and cooperation. For up to 30 days, the company responds to reasonable inquiries related to prior work, without extra compensation, though reimbursement for pre-approved expenses may apply. The customer designates an agent to manage the transfer and bears responsibility for the migration process. This structure helps managers maintain continuity and reporting while avoiding disruptions to the organisation.
Mutual releases close out disputes. Each side agrees not to bring litigation or a complaint about the relationship for acts up to the signing date, covering broad statutory claims related to the services. The non-disparagement clause protects reputations in the future and encourages a professional course of dealing.
While some agreements pair this with confidentiality, here the emphasis is on non-disparagement and good faith. Attorney's fees, waiver, governing law, and binding effect provisions round out the legal framework.
This is a services wind-down, not an employment dismissal. It does not address severance pay, non-compete clauses, discrimination, personal injury, or situations where an employee agrees with an employer to resolve workplace issues when they feel treated unfairly. Instead, it focuses on IP rights, access, reimbursement mechanics, and the completion of the transition under defined circumstances. If investigations exist or disputes attempt to resurface, the releases are designed to limit further dealings over past matters.
Example use cases include a web development firm and customer ending a project for convenience, a SaaS vendor migrating a client to a new platform after delays, or parties agreeing by letter to confirm final delivery and accept the exchange of value.
Proposal Kit can help teams assemble documents like this quickly using its extensive template library, automated line-item quoting, and AI Writer to build supporting materials. Its structured approach makes it easier to discuss options, customize terms, and keep the process consistent across engagements.
Additional points strengthen how this agreement manages risk and expectations. The Entire Agreement and written-modification clauses lock terms so side conversations do not change obligations; managers should advise teams to route any change requests through a signed amendment. The governing law and exclusive venue provisions give predictability if litigation occurs, while the waiver clause ensures that a one-time leniency does not waive future enforcement.
Assignment limits keep control over who performs any remaining duties, preserving continuity in relation to the migration and hosting wind-down. The good-faith warranty promotes constructive behavior during the 30-day transition. Together with the broad mutual releases, these terms help keep both parties legally protected while closing out the engagement.
Operationally, cataloging deliverables, third-party components, and access credentials reduces friction and aligns with the as-is transfer. Document what cannot be transferred due to outside licenses and clarify how reimbursements for pre-approved expenses will be handled. Managers can advise project leads to maintain a simple log of inquiries and responses during the cooperation window to support completion and clean reporting.
Proposal Kit can streamline this process by assembling the core agreement plus related artifacts, such as a migration checklist, asset schedule, responsibility matrix, and a concise cover letter, using its template library, automated line-item quoting, and AI Writer to produce consistent supporting documents. This helps organizations keep the process disciplined, shorten turnaround times, and preserve professional relations as services conclude.
Further insights focus on handoff quality, security, and risk allocation. Because files are provided as is, no warranties, service levels, or indemnities exist for defects discovered after the termination date. Advise teams to budget time for QA, backups, and validation of dependencies during the 30-day window to avoid costs incurred later.
Limit server access to least-privilege credentials, maintain an access log, and revoke accounts at completion. If third-party licenses are embedded, document what cannot be transferred so both parties remain legally protected.
The cooperation clause offers assistance but not hands-on migration work. Set a simple inquiry queue and pre-approve any reimbursement to prevent disputes over expenses. No penalties are specified for delays, so managers should discuss a realistic cutover schedule and attempt any extension through a signed amendment rather than informal dealing.
The mutual releases are broad, covering statutory claims tied to the services; they do not create confidentiality duties or non-compete clauses. If confidentiality is needed for data, source code, or investigations that continue after termination, add a separate clause so obligations clearly survive into the future.
Operational examples: a digital agency ending hosting while handing over admin rights; a cloud integrator closing a project where a customer felt treated unfairly about scope; or a platform provider concluding a pilot by letter and documenting completion criteria and reporting artifacts. This is not an employment or employer-employee dismissal scenario, so issues like severance pay, discrimination, personal injury, or when an employee agrees to a release are out of scope in this context.
Proposal Kit can expedite this process by assembling the agreement plus companion documents like a cutover plan, asset inventory, credential matrix, and a reimbursement policy, using its document assembly, automated line-item quoting, AI Writer for supporting materials, and a broad template library to keep the process consistent and clear.
How do you write a Service Termination and Settlement Agreement document? - The Narrative
SERVICE TERMINATION AND SETTLEMENT AGREEMENT
This Service Termination and Settlement Agreement (hereafter referred to as the "Agreement") is made this Current Date by and between Company Name (hereafter referred to as "Customer") and Company Name (hereafter referred to as "Company"). The undersigned to this agreement shall be referred to jointly as the "Parties. WHEREAS, Customer and Company have had an ongoing relationship where Company provided services to Customer; and.
WHEREAS, Company holds intellectual property it rightly owns and has outstanding balances with Customer, and. WHEREAS, the Parties wish to compromise and settle fully and finally all claims, controversies or causes of action that they may have arising out of their relationship or any work performed by Company or arising from the cessation of Company providing services (hereafter referred to as the "Settlement").
NOW, THEREFORE, in reliance on the representations contained herein and in consideration of the mutual promises, covenants and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Settlement
Company grants a worldwide, unrestricted license to use, modify, disassemble or sell the web site, development, project, services, etc. it developed for Customer, including any of Company's custom programming, source code or other files Company has an interest in that currently reside on web site, server, location, etc., excepting those files that may be subject to another party's license or intellectual property rights. Customer may continue to host its files on Company servers, subject to our standard web hosting terms and conditions, until they migrate off Company servers, which will be no later than 30 days from the signing of the Agreement. Customer will notify Company when migration is complete.
Upon such notification, web host services and access to Company servers shall end. Company shall grant access to Company's server to an agent Customer designates to facilitate transfer of their web site to a new location for a period not exceeding 30 days. Company shall accept Insert Amount as final payment for all outstanding balance(s) owed to Company and for the rights to all other Customer files in Company's possession.
There will be no extra payment required for these files. Files shall be provided "as is. Customer shall pay Company Insert Amount, payable by Method or Terms of Payment. Upon execution of this Agreement, Company will grant access to Customer's agent to facilitate the transfer of all files, data and source code to another location.
Release
Each party hereto agrees that this agreement is a result of compromise, and shall not be construed as an admission by it of: liability to any person or entity, or breach of any agreement, or violation of any law or regulation. Customer warrants that the agent designated by Customer is fully responsible for the migration and transfer of Customer's files, which includes but is not limited to Customer's web site, shopping cart, other systems, and related files. Company disclaims any and all responsibility for the migration and transfer of Customer's files, as defined above, which is to be fully completed by Customer's agent.
Company hereby releases Customer from any and all claims, demands, tort, damages or liability of any nature whatsoever prior to the date of this Agreement, known or unknown, which it may have. Consistent with the terms of this paragraph, Company further agrees to refrain from bringing, prosecuting or arbitrating any claim or lawsuit, demand or cause of action, either at law or in equity, against Customer as the result of any act, error or omission by Customer occurring up to and including the date of execution of this Agreement. Customer, acting for itself and on behalf of its agents, owners, shareholders, attorneys, attorneys-in-fact, assigns, successors and heirs hereby unconditionally and irrevocably releases, acquits, forever discharges and covenants not to sue or be party to a lawsuit against Company, its owners, predecessors, successors, subsidiaries, affiliates, assigns, agents, and any of their present or former directors, officers, employees or shareholders, from any and all claims, demands, torts, damages or liability of any nature whatsoever prior to the date of this Agreement, known or unknown, which Customer has or may have, including, but not limited to, claims arising for breach of contract, claims for equity awards, claims for damages or any other federal, state, local or foreign laws, statutes, ordinances or regulations, as well as rights under any common law causes of action.
Consistent with the terms of this paragraph, Customer further agrees to refrain from bringing, prosecuting or arbitrating any claim or lawsuit, demand or cause of action, either at law or in equity, against Company as the result of any act, error or omission by Company occurring from the beginning of time up to and including the date of execution of this Agreement.
Non-disparagement and Cooperation
Company agrees that it will not make any disparaging remarks, statements or criticism, including written or oral concerning, or taking actions which are adverse to the interests of Customer, its owners, predecessors, successors, parents, assigns or their current and former representatives, agents, officers, employees, directors, board members and employees; nor will Company take any action that would cause Customer humiliation or embarrassment or otherwise cause or contribute to Customer being held in disrepute by the public or Customer's clients, customers, users, employees, shareholders, agents, or vendors. Customer agrees that it will not make any disparaging remarks, statements or criticism, including written or oral, or take actions which are adverse to the interests of Company, its owners, predecessors, successors, parents, assigns or their current and former representatives, agents, officers, employees, directors, board members and employees; nor will Customer take any action that would cause Company humiliation or embarrassment or otherwise cause or contribute to Company being held in disrepute by the public or Company's clients, customers, users, employees, shareholders, agents, or vendors. For the first 30 days following the date of this Agreement, Company agrees to respond to reasonable inquiries and information requests, by phone or email Insert Limitations Here when requested by Customer or Customer's agent about matters or subjects Company was responsible for or worked on prior to the agreement.
Nothing in this Agreement shall require Company to migrate, move, setup, re-program, modify or assist Customer in the direct facilitation of moving Customer's files off Company servers. Company shall not be entitled to further compensation for any services Company performs pursuant to this cooperation clause; however, to the extent that Customer requests Company's cooperation, Customer shall reimburse Company for reasonable expenses subject to Customer's pre-approval of those expenses.
General Provisions
1 Entire Agreement
This Agreement contains the entire Agreement between the parties relating to the subject matter hereof and supersedes any and all prior agreements or understandings, written or oral, between the parties related to the subject matter hereof. No modification of this Agreement shall be valid unless made in writing and signed by both of the parties hereto.
2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of State. Exclusive jurisdiction and venue shall be in the County County, State Superior Court.
3 Binding Effect
This Agreement shall be binding upon and inure to the benefit of Customer and Company and their respective successors and assigns, provided that Company may not assign any of his obligations under this Agreement without Customer's prior written consent.
4 Waiver
The waiver by either party of any breach or failure to enforce any of the terms and conditions of this Agreement at any time shall not in any way affect, limit, or waive such party's right thereafter to enforce and compel strict compliance with every term and condition of this Agreement.
5 Good Faith
Each party represents and warrants to the other that such party has acted in good faith, and agrees to continue to so act, in the negotiation, execution, delivery, performance, and any termination of this Agreement.
6 Attorney's Fees
In the event any party to this Agreement employs an attorney to enforce any of the terms of the Agreement, the prevailing party shall be entitled to recover its actual attorney's fees and costs, including expert witness fees.
Each party represents and warrants that, on the date first written above, they are authorized to enter into this Agreement in its entirety and duly bind their respective principals by their signature below:
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Frequently Asked Questions
How do I customize this contract to fit my business needs?
Customizing this contract involves editing the document to include your business details, terms, and conditions. The templates are designed to be flexible, allowing you to insert your company's name, address, and other relevant information. You can modify clauses to reflect your unique business practices and legal requirements.
Is this contract compliant with laws and regulations?
The legal contract templates are written by legal professionals and designed to comply with current laws and regulations at the time of their writing. However, laws can vary by jurisdiction and change over time, so it's recommended to have your contract reviewed by a local attorney to ensure it meets all legal requirements specific to your region and industry. Templates are licensed as self-help information and not as legal advice.
Can I use the same contract for different clients or projects?
You can use the same contract for different clients or projects. The templates are versatile and easily adapted for various scenarios. You will need to update specific details such as client names, project descriptions, and any unique terms for each new agreement to ensure that each contract accurately reflects the particulars of the individual client or project.
What should I do if I encounter a clause or term I don't understand?
If you encounter a clause or term in the contract that you need help understanding, you can refer to guidance notes explaining each section's purpose and use. For more complex or unclear terms, it's advisable to consult with a legal professional who can explain the clause and help you determine if any modifications are necessary to suit your specific needs.
How do I ensure that the contract is legally binding and enforceable?
To ensure that the contract is legally binding and enforceable, follow these steps:
- Complete all relevant sections: Make sure all blanks are filled in with accurate information.
- Include all necessary terms and conditions: Ensure that all essential elements, such as payment terms, deliverables, timelines, and responsibilities, are clearly defined.
- Signatures: Both parties must sign the contract, and it is often recommended that the contract be witnessed or notarized, depending on the legal requirements in your jurisdiction.
- Consult a legal professional: Before finalizing the contract, have it reviewed by an attorney to ensure it complies with applicable laws and protects your interests.
Ian Lauder has been helping businesses write their proposals and contracts for two decades. Ian is the owner and founder of Proposal Kit, one of the original sources of business proposal and contract software products started in 1997.By Ian Lauder
Published by Proposal Kit, Inc.Disclaimers
Proposal Kit, Inc. makes no warranty and accepts no responsibility for the suitability of any materials to the licensee's business. Proposal Kit, Inc. assumes no responsibility or liability for errors or inaccuracies. Licensee accepts all responsibility for the results obtained. The information included is not legal advice. Names in use cases have been fictionalized. Your use of the contract template and any purchased packages constitutes acceptance and understanding of these disclaimers and terms and conditions.
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