Understanding Termination of Construction Contract for Convenience
As a construction professional, you want to protect your right to work. You don’t want to lose out on your ability to work on a project simply because the client doesn’t want you there for some reason, but the truth is that they have the option to do so. This is called “termination for convenience” and it’s a clause that’s now found in many construction contracts.
A “termination for convenience” clause states that a property owner may terminate a contractor at its convenience for no reason at all. There does not need to be any breach of contract in place. However, the clauses typically require advance notice (such as 30 days).
These clauses also contain detailed information about what damages and fees a contractor would be entitled to receive if they are terminated at the owner’s convenience. Damages typically include the amount of material and services the contractor provided until the date of termination as well as any adjustment to cover additional overhead or costs incurred by the contractor due to the termination. However, the contractor waives any claim to lost profits or additional revenue that they might have earned after the date of termination.
These clauses help bring closure to a contractual relationship between an owner and contractor, but there may be some confusion on the contractor’s part in regards to what they are owed. If this cannot be settled between the client and contractor, then there may be litigation involved. However, any claims related to improper termination, lost profits, and other damages would be barred.
Termination for convenience clauses can be helpful to an owner. It is highly recommended that a property owner’s contract contain a clause for termination for convenience. This type of clause gives the owner great latitude and can resolve a contractual relationship that is not working out without the need for litigation.
On the other hand, if you are a contractor, you should be aware of these clauses. Are they in your current contracts? If not, then you won’t have to worry. If they do exist in a contract, you should properly prepare in the event that the property owner decides to dissolve the relationship.
Whether you are a homeowner or general contractor, you may not be too familiar with this clause. It is always wise to consult with an attorney concerning this clause and whether or not you should include it in a construction contract.
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Construction contracts can be terminated for a variety of reasons. Whether you are a homeowner or construction professional, you should understand your legal rights.
From assessing your right to terminate to analyzing the financial impact of termination to seeking appropriate relief, a Florida default & convenience terminations lawyer from Linkhorst & Hockin, P.A. can assist you. To schedule a consultation, fill out the online form or call 561-626-8880.