“For Cause” Contract Termination: An Overview

Most contracts, particularly construction contracts, will come to an end because a project has been completed successfully. However, there are situations where the contract needs to end early for a variety of reasons. There could be a dispute or perhaps the job was simply canceled.

In many situations, your construction contract will include a termination clause. It sets out how the contract can be stopped by either party. While there can be many reasons why a termination will occur, the most typical reason is “For Cause” and “For Convenience.” In this article, we will discuss what “for cause” means.

What Termination “For Cause” Means in a Construction Contract

When any party to a contract cannot complete the terms, that inability may breach or violate the agreement. When a breach occurs, you or the other party could terminate the contract because it was not fulfilled as required.

This type of termination is referred to as “for cause” because there is a specific reason that the contract is stopping, and many of those reasons are expressly set out in the contract. Some of the most common causes to terminate a contract include:

  • Inability to pay as promised
  • Cannot fulfill desired timelines
  • Catastrophe or the project becomes impossible or not feasible
  • Poor workmanship or unsatisfactory performance
  • Change in project goals

Specifically setting out what conditions will warrant triggering the termination clause will also indicate to the other party what factors are important to you and your project.

Getting Help with Your Construction Contract

Whether you are creating a construction contract or you have just had someone terminate a contract on you, Adler Law can help. Call today to learn more or to set up an appointment with our team.

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Adler Law, A P.C.

Robert Adler is a sole practitioner who has spent over three decades protecting the rights of construction, real estate, business litigation, and personal injury clients throughout Calabasas, California—and beyond.

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