cancellation clause

A clause in a contract or lease that allows one or either party to cancel it upon the happening of certain named events other than a default.It is most often encountered:(1) in the lease for a single-tenant commercial building or house, allowing the landlord to cancel the lease upon sale to another owner who wishes to occupy the property rather than use it as an investment, and (2) in a commercial lease for a small-space user who might stand in the way of expansion by a larger tenant.Well-negotiated leases include a provision for some sort of compensation to the tenant if this happens.