A client sent you a contract, and somewhere in it is a section headed "Termination" — or "Cancellation" — and maybe a paragraph about a "kill fee." This page explains what those words do. It doesn't tell you whether to sign them; it describes what they mean, so you can read your own agreement with your eyes open.
What it does
A termination clause sets out how the agreement can end before the work is finished: who is allowed to end it, how much warning they owe, and what is still owed on the way out. A common structure lets either side end the agreement for convenience — meaning for any reason, or none — on a set number of days' written notice, and lets either side end it immediately for cause if the other breaks the agreement and doesn't fix the problem within a stated cure period after written notice. When a project ends this way, the usual baseline is that the person who did the work is paid for the services already performed through the effective date the agreement ends.
A kill fee (also called a "cancellation fee") is the money side of an early end. When a project is called off partway, two different amounts can be in play: payment for the work already done up to the cutoff, and — in some contracts — a separate set fee on top of that. The set fee is meant to compensate the contractor for capacity that was reserved for the engagement and other work that was turned away to take it. In a typical freelance agreement drafted from the contractor's side, the kill fee is a fixed dollar amount or a percentage of the fees not yet billed, and the contract often recites that the figure is a reasonable estimate of losses that are hard to measure — framed as a fair pre-estimate rather than a penalty.
The variations you'll see
- Pay for work done, a set kill fee, or both. Some clauses promise only payment for the services performed to the cutoff date. Others add a flat kill fee, or a percentage of the unbilled fee, on top. These are two different amounts answering two different questions — one for work delivered, one for the cancellation itself.
- A flat number or a percentage. Where a set fee is used, it may be a fixed dollar figure or a percentage of the remaining contract value. A percentage tends to scale with how much work was left when the cancellation landed.
- Notice, or none. Ending "for convenience" often requires a set notice period — a number of days' written warning. Some versions require no notice at all; others let a party skip the notice but owe the fee instead.
- Who may end it. Some clauses let either side end for convenience; others give that right to one side only. Ending "for cause" — for a breach the other side didn't cure — is commonly available to both.
- Liquidated damages and exclusive remedy. A set cancellation fee is frequently written as "liquidated damages" and as the only remedy for the convenience cancellation itself, separate from amounts owed for work performed. Whether a fee like this is enforceable can turn on whether it reads as a genuine estimate of loss rather than a penalty, and that varies from state to state.
How it reads from each side
- If you're the one doing the work, this is the section that says what happens if the engagement ends before you finish it — whether you're paid only for what you delivered, or also compensated for the booking you set aside. A notice period is the warning you'd get; a kill fee, where there is one, is the cushion for capacity reserved and work declined.
- If you're the one hiring, termination for convenience is the exit ramp — a way to stop a project you no longer need. A kill fee, where the contract has one, is the price of using that ramp before the work is done, and the notice period is the warning you'd owe the other side.
A one-sided kill fee — payable to the contractor and not to the client — is ordinary in a form the contractor hands over; it isn't, by itself, a sign of anything unusual.
Where it is on the checklist
A cancellation term is one of the things our free Before You Sign checklist flags as worth finding and reading closely in a contract you've been sent — it lists "If the client cancels partway, you're paid for work already done" as a term to look for. You read your own document and score it yourself; we never see it, and the checklist doesn't assume what yours says.
Reading the rest of it
The clauses around this one are worth the same read: Payment terms · Limitation of liability · Ownership of the work · Non-compete.
The most comfortable place to be with a clause like this is on the side that wrote the first draft. If you're the one sending the agreement, you can build one free — written from your side, with a plain-English note on what each clause does.
Whether a kill fee or cancellation term is right for your situation is a question for a lawyer licensed in your state. This page explains the clause; it doesn't advise you on your deal.