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The short answer
A kill fee clause says what a client pays if it cancels a project before completion: usually payment for all work done to the cancellation date plus an agreed percentage of the unfinished fee. Nigerian courts enforce an agreed sum like this as liquidated damages if it is a genuine pre-estimate of your loss, but will treat an extravagant sum meant to scare the client as an unenforceable penalty (Oyeneyin v Akinkugbe, Supreme Court, 2010).
What a kill fee is, and what it is not
Freelancers abroad who take work from Lagos, Abuja or Port Harcourt clients meet the same pattern as anywhere else: a project starts, a budget is cut or a new manager arrives, and the work is stopped halfway. Without a written term on cancellation, you are left arguing about what you are owed for hours already spent, from another time zone, against a client who holds the money. A kill fee clause settles that argument before it starts.
A well-drafted cancellation clause usually does three separate jobs, and it helps to keep them apart in the wording:
- Payment for work done. Everything delivered or completed up to the date of the cancellation notice, priced at the contract rate. This is a debt for work performed, not a penalty.
- Non-cancellable costs. Expenses you have committed to and cannot recover, such as stock footage licences, travel booked, subcontractor fees or software bought for the job, backed by receipts.
- The kill fee itself. An agreed sum, often a percentage of the remaining unpaid fee, to cover time you reserved and turned other work away for.
Only the third part is open to the penalty argument. The first two are simply the price of what was done, and the clause should say so in plain words.
How Nigerian courts treat an agreed cancellation sum
Nigerian contract law follows the common-law line between liquidated damages and penalties. A summary by the dispute resolution team at Broderick Bozimo & Company, published in BusinessDay on 2 October 2025, sets out the position: liquidated damages are compensatory and enforceable, and the agreed sum is payable without proof of loss; a penalty is punitive and unenforceable, and the claimant is left to prove actual damage under general principles. The article cites the Supreme Court in Oyeneyin v Akinkugbe (2010) LPELR-2875(SC), which warned against clauses designed to "terrorise" a party into performing, and the English case Dunlop Pneumatic Tyre Co v New Garage (1914), under which the sum must be a genuine pre-estimate of loss rather than an extravagant figure aimed at deterrence.
For a freelancer, the practical reading is that a kill fee you can explain will hold up better than a large round number. A clause that charges 100% of the full contract value on any cancellation, however early, invites the argument that it is there to punish. A clause tied to the notice period you would need to replace the work is easier to defend.
Building a kill fee that holds up
The same BusinessDay piece gives three drafting points: keep the sum proportionate to the risk, keep a record at the time of how you arrived at the figure, and describe it clearly as a genuine pre-estimate of loss. Turned into a freelance contract, that looks like this:
- State the notice period you need to fill the gap in your schedule (for example, two weeks for a design retainer, a month for a large build).
- Set the kill fee as a stage-based percentage of the unpaid balance: lower if the client cancels early, higher once you have blocked out a long period.
- Write one sentence saying the parties agree the fee reflects your reserved capacity and the work you have declined, and is not intended as a penalty.
- Keep your own note of the reasoning: your usual monthly booking rate, what you turned down, how long replacement work typically takes.
- Say how cancellation is given (written notice by email to a named address) and from what date the fee is calculated.
Worked example
Example only. A UK-based developer agrees a ₦6,000,000 build for a Nigerian start-up, paid in three equal milestones of ₦2,000,000. The first milestone has been paid. The client cancels when the second milestone is 50% complete. The contract says: work done is paid pro rata, and the kill fee is 20% of the remaining unpaid and unstarted value.
| Item | Calculation | Amount |
|---|---|---|
| Second milestone, 50% done | 50% × ₦2,000,000 | ₦1,000,000 |
| Unstarted value | ₦1,000,000 (rest of milestone 2) + ₦2,000,000 (milestone 3) | ₦3,000,000 |
| Kill fee | 20% × ₦3,000,000 | ₦600,000 |
| Total due on cancellation | ₦1,000,000 + ₦600,000 | ₦1,600,000 |
The first ₦1,000,000 is payment for work performed. Only the ₦600,000 could ever be challenged as a penalty, and a 20% figure linked to unstarted work is a modest, explainable number.
Deposits and payment structure do most of the work
A kill fee is a promise to pay later, and chasing it from abroad is slow. The stronger protection is structural: an upfront deposit, milestone payments released before the next stage begins, and a rule that work stops if an invoice is unpaid past its due date. Our guides on deposits before starting work and milestone payments on Nigerian tech projects cover those terms in detail. With a deposit held, the cancellation clause can say the deposit is applied first against work done and the kill fee, with any excess refunded, which removes most of the dispute.
Keep in mind where any claim would be heard. The governing law and jurisdiction clause decides whether a Nigerian court, a court where you live or an arbitrator applies the penalty test; see governing law and jurisdiction. Under Nigerian law the time limit for bringing a contract claim is generally six years in Lagos under its Limitation Law, according to a BusinessDay commentary from September 2025, but the practical window for recovering money from a client who has moved on is much shorter.
If the client cancels without the clause
Where the contract is silent, you can still claim for the work done at the agreed rate, or a reasonable sum for it if no rate was set, and for losses you can prove. What you lose without a clause is the agreed figure: you must show the loss rather than point to a number. Send a written account straight away: the date work stopped, what was delivered, the hours spent, the costs incurred, and an invoice. Then follow the steps in our guide to chasing a Nigerian client for late payment.
Where Pryme fits
A Pryme Business Account can hold naira alongside dollars, pounds and euros, so a deposit or cancellation payment from a Nigerian client can arrive in naira and be converted only when you choose. Invoicing keeps the invoice and payment record together, which helps if you ever need to show what was billed and when. The app shows the rate and the fee before you approve any conversion.
Questions people ask
Can a Nigerian client refuse to pay a kill fee?
It can refuse, but if the clause is a genuine pre-estimate of your loss it is enforceable as liquidated damages under Nigerian law. If the sum is extravagant and aimed at deterring cancellation, a court may treat it as a penalty and require you to prove actual loss.
What percentage should a kill fee be?
There is no fixed legal figure. Choose a percentage you can explain from your reserved time and lost bookings, often lower for early cancellation and higher later, and record your reasoning when you set it.
Is payment for work already done part of the kill fee?
It should be a separate line. Work completed to the cancellation date is owed at the contract rate as a debt; the kill fee is an extra amount for unfinished work and reserved capacity.
Do I need a lawyer to write a cancellation clause for a Nigerian client?
Not for a small job, but for a large or long contract it is sensible to have a Nigerian lawyer review the clause and the governing law term, since enforcement depends on both.
Sources
- BusinessDay: Liquidated damages and liability clauses under Nigerian law (2 Oct 2025) · accessed Oct 2026
- BusinessDay opinion: Nigeria tax record retention, know the rules (2 Sep 2025) · accessed Oct 2026
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