Termination for convenience
A termination for convenience clause, or "T for C" clause,[1] enables a party to a contract to bring the contract to an end without the need to establish that the other party is in default, for example because the client party's needs have changed, or in order to arrange for another party to complete the contract.[2]
Parties may agree to include a termination for convenience clause in a contract under the freedom of contract principle. However, in some countries and legal jurisdictions they may be
Use in the United States
In the
Termination policies for contracts for the acquisition of commercial items are covered separately in FAR 12.403, and the FAR notes that the concepts involved in such termination are different from the Part 49 concepts.[4]
Normally, where the price of the undelivered balance of the contract is less than $5,000, the contract would not be terminated for convenience but would be permitted to run to completion.[5]
In the case of
Other examples
In Canada, the Supreme Court of Canada has recognised that good faith contractual performance is a general organising principle of the common law. This duty applies to all contracts, requiring parties to act honestly in the performance of their obligations, and therefore would operate to determine whether activation of a termination for convenience clause had been done in good faith.[7]
In
In Singapore, clause 31.4(1) of the Public Sector Standard Conditions Of Contract (PSSCOC) issued by the Building and Construction Authority allows the employer to terminate a contract "at any time" by virtue of "a written notice of Termination".[9][8]
The FIDIC Red Book 1999 contains similar provisions to the PSSCOC form.[8] Under most of the family of JCT contracts, there is no general right to terminate without cause.[10]
Parties to a contract may agree that they will not terminate it during a specified period, but that either party may opt to do so once that period has expired. In the Austrian case of pressetext Nachrichtenagentur GmbH v
References
- ^ McGreevy, S., T for C clauses set no limits on termination, accessed 27 December 2020
- ^ Garrett, L., UK: Termination For Convenience, published 5 August 2013, accessed 18 April 2020
- ^ a b FAR Part 49, accessed 28 March 2020
- ^ FAR 12.403, accessed 3 April 2020
- ^ FAR 49.101(c), accessed 3 April 2020
- ^ G. L. Christian and Associates v. the United States, 312 F.2d 418 (Ct. Cl. 1963), accessed 28 December 2020
- ^ Mireault, A., An Uncertain Fate: Changing Principles of Termination for Convenience, MLT Aikins LLP, published 17 December 2018, accessed 23 April 2020
- ^ a b c White and Case, Termination for convenience: What is the contractor entitled to?, Justin Bailey, Michael Turrini and Therese Marie Rogers, published 26 April 2017, accessed 21 April 2020
- ^ Building and Construction Authority, Public Sector Standard Conditions Of Contract 2014, seventh edition, accessed 21 April 2020
- ^ Joint Contracts Tribunal, Termination under JCT building contracts, published 22 July 2016, accessed 23 April 2020
- ^ European Court of Justice, pressetext Nachrichtenagentur GmbH v Republik Österreich (Bund), APA-OTS Originaltext-Service GmbH and APA Austria Presse Agentur registrierte Genossenschaft mit beschränkter Haftung, Case C-454/06, paragraph 75, delivered on 19 June 2008, accessed 9 January 2024