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Can a client terminate a contract “for convenience?”

On Behalf of | Nov 23, 2018 | Business Litigation |

Much of the stability of your business in Daytona Beach comes from the confidence in knowing that your clients cannot simply walk away from your contractual agreements. If they do want to cancel a contract, they typically need to have cause to do so. Yet are there exceptions to this rule? 

There may be times when a contracted partner is allowed to terminate an agreement for convenience. Basically, the concept of “termination of convenience” allows a contracted entity to end is contract if it believes it to be in its best interest. Per the Congressional Research Service, government entities are automatically granted this privilege. Some of the reasons that a government agency may cite when terminating an agreement with you for its convenience may include: 

  • It now being able to provide the goods and services needed in-house
  • A breakdown or deterioration in your business relationship
  • If questions of propriety surrounding your being awarded the contract arise
  • When you refuse to renegotiate the terms of your agreement

Private companies might also try and cite convenience for terminating a contract with you. Such a privilege, however, is only afforded to them if it is granted in the terms of your contract. 

So what can you recover when a client terminates your contract for convenience? The law allows you to collect whatever is due for the work that you have thus far done, as well as whatever is needed to cover the costs of you ending your services. You can try to go after the company or agency for breach of contract, yet to succeed in doing so, you typically need to prove that it never intended to fulfill the terms of the initial contract, and thus negotiated with you in bad faith.