As a contractor, you know that the wording and what’s included on your contracts can vary from one project to another significantly. Sometimes, these contracts are extremely detailed, outlining all aspects of the project and parties involved, or they can be extremely simple.
Whether you are dealing with a detailed or simple contract, one part of it that should not be forgotten or left out is a termination clause. This is used to let all involved parties know what must be done to end the contract and what conditions make it acceptable.
Why is a termination clause so important?
The termination clause lets all parties know when it is acceptable to end a contract due to a breach or another factor. Without this clause, getting out of a contract can be challenging. Including a detailed termination clause that outlines the terms necessary for termination is essential to protect all parties involved.
Acceptable termination terms
In most cases, construction contracts aren’t ended just because you changed your mind. You have to have a reason, such as a contractor not meeting the set milestones, which would be a “for cause” termination.
There is, however, also something called a “for convenience termination.” This aspect of the contract states it can be ended for almost any reason. Including this clause in your contract is a good idea in many cases.
Limitations to termination clauses
Keep in mind that there are limitations to these clauses, and just because you terminate a contract doesn’t mean you have to pay for work that has already been done. There may be other stipulations that you have to meet, too. However, you have legal rights, and knowing these will help you protect yourself in these situations.