Desired result & what it means

The “Term” clause of an e-resources agreement refers to the period of time the agreement is in effect, beginning with the agreement’s “Effective Date” and expiring as specified by the parties. The parties can decide that they want the e-resources agreement to have a renewal schedule or renewal terms, and we’ll address Renewal in a follow-on chapter.

There’s no prescribed or predefined period of time that works best for your agreement. Your preferred term can vary based on a number of factors like: the amount of money you presently have available to license the resource; your library’s expected budget over succeeding fiscal years; restrictions on how and when you can encumber funds for future years; and for how long you’re able to lock in licensor prices. On the licensor’s side, it can also vary based on how often they expect to change or raise prices, their future business plans (such as for modifications improvements for which they might seek cost recovery), and market demand.

What matters most about the Term clause from a legal perspective are the following:

• If you anticipate initial terms/renewal periods, it may be helpful to reflect that in the agreement by referring to the first term as the “Initial Term” to distinguish the initial period from the renewal period; and
• Certain rights and obligations may survive the termination of the contract. These can be addressed either within each applicable clause that you want to survive, or in a separate “Survival” clause, which we address in a subsequent chapter;

Desired language

From California Digital Library’s Model License:

This Agreement shall be in effect from the Effective Date through the expiration date as set out in Appendix A unless terminated earlier in accordance with the provisions in Section XI [Early Termination]

Tricks & Traps

Typically, the Term of the agreement is considered to be the period in which the agreement is in effect, after which the agreement is considered to have expired. For instance, “This agreement terminates on June 1, 2028” should be equivalent in meaning to “This agreement expires on June 1, 2028.”

But keep in mind there is also a mechanism in most e-resources agreements allowing for the parties’ early termination. A party may typically terminate the agreement early for reasons such as the other party’s material breach, financial insolvency, force majeure, etc. As such, you could introduce confusion into your agreement if you were to draft the Term clause as above, but then elsewhere in the contract refer to “the termination of this agreement,” there could be confusion as to whether you mean termination by expiration or termination for cause.

One way to keep matters clear is: If you use “terminates” exclusively to reference the agreement concluding through early termination, you should follow it with language such as, “as set forth in Paragraph [X].” For instance, you would write, “This agreement is in Effect as of [Effective Date] through through the expiration date of ________, unless a party terminates it earlier in accordance with Paragraph [X].”