tail period
Definition
A tail period is a window of time after a contract ends during which the original agreement still partially applies to deals or relationships that started during the contract. This most commonly shows up in sales agreements, recruiter contracts, and business broker deals, where the other party can still earn their fee or commission even after you've officially parted ways.
Example
If you hire a recruiter with a six-month tail period and they introduce you to a candidate, then you end the contract but hire that candidate three months later, you still owe the recruiter their placement fee.
Watch Out
Tail periods can last anywhere from 30 days to two years, so always negotiate this length before signing any agreement involving referrals, introductions, or sales leads.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.