Contract Glossary
Key Person Clause
Definition
A contract provision that gives one party the right to terminate or renegotiate the agreement if a specific individual — the 'key person' — leaves, dies, becomes incapacitated, or is no longer actively involved in performing the contract. Common in consulting, creative, and professional services agreements where the client hired the firm specifically for access to a particular person's expertise.
In Practice
You hire a boutique law firm specifically because a senior partner specializes in cryptocurrency regulation. Your retainer agreement includes a key person clause naming that partner. Six months in, the partner leaves to join a competing firm. The key person clause gives you the right to terminate the retainer without penalty — because you hired the firm for that specific person's expertise, and the firm can no longer deliver it.
Example Clause
The Client acknowledges that [Name] ('Key Person') is essential to the performance of Services under this Agreement. If the Key Person ceases to be actively involved in providing Services for any reason — including resignation, termination, death, or disability — the Client may terminate this Agreement upon fifteen (15) days' written notice without incurring any termination fee or early termination penalty.
Common in these contract types
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Frequently asked questions about key person clause
Whenever you're hiring a firm primarily for a specific individual's skills, relationships, or expertise. Common scenarios: management consulting engagements where a named partner leads the project, creative agencies where a specific creative director handles your account, law firms where a specialist attorney manages your case, and investment funds where the fund manager's track record is the reason you invested.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.