Section 8.34 Termination for Convenience

• Library: Construction Law 2016 Supp

J. (§8.34) Termination for Convenience

AIA Document A201-1997, General Conditions of the Contract for Construction (15^th ed.), ¶ 14.4, permits the owner to terminate solely for its convenience, but the owner must pay the contractor for the portion of the work performed and reasonable overhead and profit on the work not executed. Paragraph 14.4.3. Federal contracts generally do not permit recovery of anticipatory profits or consequential damages upon termination for convenience by the government. See FAR § 49.202(a); 48 C.F.R. § 49.202(a). Originally, the federal government inserted these clauses in wartime contracts to avoid purchases after hostilities had ended. Frequently, an owner may try to insert a contract clause that automatically converts a wrongful termination into a termination for convenience. Similarly, the owner may argue after litigation has started that a wrongful termination was also justified as a convenience termination so that the contractor’s damages are limited by the clause. See Krygoski Constr. Co. v. United...