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Termination for Cause vs. Termination for Convenience

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In the construction industry, there are few things more frustrating than a promising contract being terminated for seemingly no reason at all. One minute, construction is proceeding according to plan, and the next, you’re informed that your services are no longer needed and construction is to be halted immediately. When this happens, there’s a strong possibility that you’ve already purchased materials and signed contracts with subcontractors. Suddenly, you’ve got an entire project’s worth of expenses resting on your shoulders with no money funneling in from the owner. What should a contractor do?

First and foremost, contractors dealing with contract terminations should consult a Tallahassee construction lawyer to see if the termination could be considered “wrongful.” Contractors can pursue damages for wrongful terminations, but they must also be able to prove that they didn’t breach the contract. There are two main types of termination: termination for cause and termination for convenience. The former is typically supported by the terms of the contract, but the latter is indicative of a wrongful termination.

Termination for Cause

A contract can be terminated “for cause” when one party breaches the terms and conditions of the contract. For instance, if you breach the contract due to cost overruns or failure to meet deadlines, the termination may be deemed justifiable. Therefore, if you fulfill all of your contractual obligations, you probably don’t have to worry about your contract being suddenly terminated for a legitimate reason. If an owner attempts to terminate your contract without cause, consult a Tallahassee construction lawyer

Termination for Convenience

Unlike a termination for cause, a termination for convenience occurs without a breach of contract. Basically, one party decides that they’ve had enough and want to walk away. It’s not technically legal, unless the contract gives either party the right to do this, but it does occur in the construction industry. Never let an owner include a clause in the contract establishing their right to terminate a contract for reasons of convenience. You don’t want all of your hard work to be squandered away, and the aftermath of a terminated contract can be a messy exercise in frustration. Chances are you’ve already made promises and signed contracts that you can’t take back, and owners who attempt to terminate contracts without real cause are rarely looking to reimburse you. When this happens, it may feel like you’re out of options, but a Tallahassee construction lawyer can help you recover financially by pursuing a claim for damages.

If you would like to speak with one of our Tallahassee construction lawyers, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.