Section 8.25 Termination Provisions

• Library: Construction Law 2016 Supp

A. (§8.25) Termination Provisions

Termination of a construction contract can occur in at least three ways:

1. Termination by mutual agreement

2. Termination for convenience without the fault of either party

3. Termination or excusal of performance by a party because of the material breach of the other party

The most problematic issue is the determination of when a breach is sufficiently material to excuse performance of the party entitled to performance and allow that party to terminate the agreement. See the discussion of termination for material breach in §8.27 below. The typical construction contract addresses the general circumstances under which termination may occur, as well as the rights and remedies available to the parties in the event of termination. Issues that should be considered in contemplating termination include the:

· timing and manner of notice that needs to be given;

· opportunity to cure, if any, the reasons for termination and how these reasons may affect the notice and opportunity for cure;

· damages available to the nonbreaching party upon termination; and

· rights of the breaching party to any additional compensation upon termination.

In addition, notification of the contractor’s surety and the surety’s role in completing...