{"id":3310,"date":"2018-01-24T11:50:31","date_gmt":"2018-01-24T16:50:31","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=3310"},"modified":"2026-02-12T05:29:51","modified_gmt":"2026-02-12T10:29:51","slug":"contract-termination-a-matter-of-convenience","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/contract-termination-a-matter-of-convenience\/","title":{"rendered":"Contract termination: A matter of convenience"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/strategy-legal-operations\/\" class=\"entry-header__link\">Strategy, Legal &amp; Operations<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tContract termination: A matter of convenience\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2018-01-24T11:50:31-05:00\">January 24, 2018<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Contract termination: A matter of convenience\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/contract-termination-a-matter-of-convenience\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/alexanderbarthet\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/04\/CRE-Alex-Barthett-1-350x350.jpg\" class=\"entry-author__image\" alt=\"CRE Alex Barthett\" \/>\t\t\t\t<span class=\"entry-author__name\">Alex Barthet<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Found in many subcontracts is a \u201ctermination for convenience\u201d provision. &nbsp;And as the words suggest, if for any reason\u2014or for no reason at all\u2014the prime contractor wishes to end the relationship, it can do so without penalty. In fact, not long ago, a Florida court upheld a general contractor\u2019s right to exercise the termination for convenience just so he could obtain a better price from another subcontractor.<\/p>\n\n\n\n<p>Effectively, a termination for convenience clause makes the construction contract nothing more than a day-to-day agreement. A typical subcontract termination provision looks something like this:<\/p>\n\n\n\n<p><em>In its sole discretion and without notice to any guarantors or sureties, contractor may, at any time prior to final payment, terminate this subcontract for its convenience for any reason whatsoever, or for no reason, upon the giving of written notice to subcontractor. In no event shall subcontractor be entitled to consequential damages or loss of profits on portions of the work not yet performed. If terminated for convenience, subcontractor shall be entitled to be paid all costs of all work provided hereunder including reasonable and necessary costs of termination together with the profit percentage attributable to the costs so determined. Payment shall be made in accordance with and subject to the payments terms of this agreement.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-prime-contracts-also-impacted\">Prime contracts also impacted<\/h2>\n\n\n\n<p>A similar termination for convenience provision can also be found in a GC\u2019s contract with the owner. However, it may (and should) contain limitations on when the termination for convenience may be triggered. These triggers could be if a building permit is not issued or financing does not materialize.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-limiting-your-risk\">Limiting your risk<\/h2>\n\n\n\n<p>Savvy GCs and subcontractors need to be aware of such contract language allowing a termination for convenience and make sure it won\u2019t compromise any payment for work already completed. You can protect yourself by adding a provision such as this:<\/p>\n\n\n\n<p><em>For a termination without cause or for convenience, contractor shall notwithstanding anything to the contrary, be entitled to receive payment for all work performed, materials ordered, and on-site demobilization as well as an agreed overhead and profit to date of termination.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-summary\">Summary<\/h2>\n\n\n\n<p>While termination for convenience clauses may have originated in federal government procurement contracts, they are now becoming more common in private contracts. Make sure you fully understand all termination language in your contracts and take appropriate steps to mitigate your risks.<\/p>\n\n\n\n<p>&nbsp;<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Found in many subcontracts is a \u201ctermination for convenience\u201d provision. &nbsp;And as the words suggest, if for any reason\u2014or for no reason at all\u2014the prime contractor wishes to end the relationship, it can do so without penalty. In fact, not long ago, a Florida court upheld a general contractor\u2019s right to exercise the termination for [&hellip;]<\/p>\n","protected":false},"author":76,"featured_media":3313,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[44],"tags":[192,173],"business_type":[],"lilypad":[],"context":[],"industry":[50],"persona":[],"imagine_tag":[246],"coauthors":[627],"class_list":["post-3310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-strategy-legal-operations","tag-construction","tag-construction-risk-management","industry-construction-and-real-estate"],"sage_meta":{"region":"en-us","author_name":"Alex Barthet","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2018\/01\/1675w-x-1275h_0007_Layer-16.jpg","imagine_tags":{"246":"Construction"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/3310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/76"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=3310"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/3310\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/3313"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=3310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=3310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=3310"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=3310"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=3310"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=3310"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=3310"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=3310"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=3310"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=3310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}