When Is a Termination for Convenience Improper?

摘要

Clauses allowing termination for convenience make it possible for a public or private owner to terminate a contract, at its sole discretion, for reasons unrelated to the contractor's performance of the work. The "convenience" termination concept dates back to the Civil War in the United States. Once the war was over, the federal government sought to wind down its military procurements by ending wartime contracts that were no longer necessary. In today's world, provisions allowing termination for convenience are often used when the parties encounter an impossibility of performance, for example, if an owner cannot obtain additional financing to complete the work or if an unknown or concealed condition is discovered. When an owner exercises the provision in good faith, it pays the terminated contractor certain damages set forth in the contract and generally does not permit the contractor to recover for lost profits on the unperformed work.