Category: Contracts & management
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Termination ends the contract before completion, either for a party's material breach after notice and a cure period, or for the owner's convenience where the contract allows it with compensation. It is followed by measuring the work done and settling the account.
Why it matters on a project
Termination outside the contract terms turns the terminating party into the one in breach who pays damages. Proper termination needs timely written notices and a record of the site's condition.
Measurement and pricing
Amount due from work executed and materials supplied, less payments, damages and any extra completion cost per the contract.
Common mistake
Removing the contractor from site without following the written termination procedure, so he is awarded damages.
Frequently asked questions
What is a material breach?
A breach that deprives the other party of the contract's main purpose, such as long stoppage or repeated non-payment, as the contract defines.
What happens to guarantees after termination?
The owner may call them if termination is the contractor's fault under the contract, and returns them if it is for the owner's convenience.
Related terms
- Suspension of worksA temporary stop of the works by the owner's order or the contractor's right under the contract.
- Final accountThe final financial settlement of the contract value after completion.
- Performance bondSecurity the contractor gives the owner against failure to perform.
- Contractual claimA formal request for money or time under the contract.
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