Getting Paid After A Convenience Termination

They may not seem fair, but termination for convenience clauses are a part of life for Florida construction contractors. You will certainly see the familiar language when working on certain public projects, which are governed by US government acquisition regulations: The contracting official may terminate performance of a construction contract, in whole or in part, if it is determined that doing so is in the government’s best interests. Plus, convenience termination provisions are also being included in private construction contracts more frequently.

If you receive a notice of termination, you can rest assured you will not be walking away and taking a loss for the labor and/or materials you supplied. You are entitled to payment, though every case is different and the details can be complicated. A Florida default & convenience terminations attorney can advise you on tactics for getting paid, since you may be entitled to recover: 

Pre-Contract Expenses 

There is some ramp up involved when awarded a contract, and contractors often incur substantial costs when preparing to meet the anticipated delivery schedule. Some of these activities occur even before the first payment, but contractors build them in so they can be absorbed over the course of the project. These starting and preparatory costs are usually recoverable, as measured by what was not absorbed as of the date of termination. 

Work and Materials at Termination 

Contractors are entitled to payment for all labor and materials supplied until the owner exercises the termination for convenience clause. In addition, though the laws typically require the contractor to stop work immediately, they also recognize the reality of construction projects: It may not be feasible to discontinue work immediately, often for safety reasons. Contractors are entitled to payment, as long as they are not negligent or willful in their efforts to stop work. 

Settlement Costs 

A convenience termination of the general contractor impacts subcontractors, supplies, and vendors. The property owner may be liable for winding down construction work, as well as for paying employees who assist with these efforts.

Plus, upon receiving a notice of termination, a Florida contractor is usually required to prepare a termination proposal that summarizes the costs and proposing payment. You may qualify to recover amounts incurred in drafting the proposal, since you might need to retain legal, accounting, and related services. 

Lost Profits 

Though not as common, you might have a claim for lost profits that you would have earned had the contract been performed completely. Some construction contracts address the issue of lost profits by including a liquidated damages clause that specifies the amount. 

Discuss Convenience Terminations with Our Palm Beach County Construction Lawyers

Your construction project is seriously disrupted when the government or a private property owner exercises a termination for convenience clause, but Florida contractors are still entitled to appropriate compensation. To ensure you receive fair payment, please contact Linkhorst & Hockin, P.A. You can call 561-626-8880 or go online to schedule a consultation at our offices in Jupiter, FL. After evaluating your situation, we can discuss next steps to getting paid.

Resource:

acquisition.gov/far/52.249-2