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Detailing the concept of “termination for convenience”

On Behalf of | Jun 3, 2020 | Firm News

Working contractually with your business partners in Statesville provides your company with a great deal of security. When that partner is a public entity, you may feel even more secure (given their perceived stability). Yet as many of our past clients here at Pressly Thomas & Conley can attest to, having a contract with a government agency has its own inherent risks.

Like most, you might think that a contracted partner can only walk away from your agreement if you or your company give them cause to do so. Government entities, however, receive a great deal of leeway in this regard.

Termination for convenience

A principle in relation to contract law known as “termination for convenience,” which essentially affords a contracted partner the luxury of ending a contract its inconvenience (in other words, without having legitimate cause to do so). According to information shared by the Congressional Research Service, government agencies are automatically granted the right to this. Some common reasons why your public entity partner might terminate your contract for convenience include:

  • A general breakdown in your business relationship
  • Your business refusing to renegotiate the terms of your contract
  • The agency gaining the ability to provide the goods or services you offer in-house
  • Questions arising as to your eligibility to hold the contract

Recovering damages for termination for convenience

Typically you can only recover the cost of the goods or services your company has already provided when your government partner terminates your contract for convenience. However, if you can somehow show that the agency initially negotiated your agreement in bad faith (e.g. it never intended to fulfill the terms of the contract), you may have a case for breach of contract.

You can learn more about the nuances of contract law by continuing to explore our site.