Financial Glossary: Abandonment Option


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Abandonment Option

Abandonment Option

A clause written in a contract, granting parties the Option of withdrawing from the contract before the fulfillment or completion of all the contractual duties.

This clause adds value by giving the parties the ability to end the obligation if it is unprofitable.


Abandonment options are commonly used in bilateral agreements without a set time frame for expiry. Usually, one party may decide to exit from the relationship without Penalty. This Option often appears in contracts between financial planners and their clients.

Posted by IMCA

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