Contracts & ExecutionQuestion 844 of 1605
A 'termination for convenience' clause allows a party (often the owner) to:
a.Terminate only if the contractor commits fraud
b.End the contract without alleging fault, typically while compensating the contractor for work performed and certain costs
c.Avoid paying for any completed work
d.Extend the contract indefinitely
Explanation
A termination for convenience clause permits a party, commonly the owner, to end the contract even without the other party being at fault. In exchange, the terminated contractor is generally entitled to payment for work already performed plus specified costs, and sometimes limited overhead, but usually not lost anticipated profit on unperformed work. It does not require fraud or fault, and it does not let the owner escape paying for work already done; it is a no-fault exit mechanism.
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