Construction contracts can be very simple or very detailed. Before either party signs the contract, they must ensure that they understand every term in it.

One of the important things to check before signing is the termination clause. This outlines what steps must be taken to break the contract. It may also list the reasons when a termination is acceptable.

What reasons for termination are acceptable?

Typically, you can't break a contract just because you feel like it. There has to be an acceptable reason. For example, a client could break a contract if the contractor doesn't meet milestones listed in the document. When a term of the contract is broken, the termination is considered to be “for cause.”

Another type of termination is “for convenience.” This means that a contract can be ended for any reason at all. Some construction contracts have a clause that states that they can be terminated for convenience, but these aren't all that common.

What terms apply to the termination?

It is possible that there will need to be some payment made if a contractor has already started working. This likely won't be a full payment, but they will need to be compensated for hours worked and materials used. These terms should be spelled out in the termination clause.

If there are any issues related to the termination of the contract, it's best to contact an attorney to learn what specific points apply to your case. You need to know what actions you can take and what options you have. Doing this as soon as you realize you need to terminate the contract is important.