A Forward-Thinking Firm

“Termination for convenience” explained

On Behalf of | Sep 13, 2021 | Contracts |

Securing a contract with a new business partner in Florida marks a banner day in your business’ lifecycle. It signifies security and the promise of a reliable source of revenue (provided that the contract remains in place through its negotiated term).

Like many of those that come to see us here at the Sloan Firm, PLLC, you might assume that the only thing that might allow your contract to end early would be you giving your partner to cause to terminate it. Yet that may not be the case. Indeed, a legal principle exists known as “termination for convenience,” which permits contracted partners to end business agreements when it is in their best interest to do so.

Who can terminate contracts for convenience?

According to information shared by the Congressional Research Service, government agencies and organizations automatically have the right to end contracts for their convenience. Conversely, a private company can only do so if you concede that right to them during contract negotiations. Some might wonder why you would give up such security. In some cases, however, that may simply be the price of doing business with a renowned and reputable partner.

Can you recover damages for breach of contract?

Should your contracted partner lawfully exercise its right to end your agreement for its convenience, you may question whether you can seek damages for breach of contract. In most cases, the answer is no; you can collect for services already rendered (plus any costs associated with having to end your work early). Breach of contract only exists if you can show that your partner never intended to let the contract go to term (thus proving it initially negotiated in bad faith).

You can find more information on settling contract disputes on our site.