Termination of Private Construction Contracts
Termination of a private construction contract can occur through the mutual agreement of the parties, one party's breach, impossibility of performance by a party, or operation of law. Additionally, the contract may be rescinded if it was entered into as the result of fraud, mistake, duress, or undue influence. When the contract is terminated, continuing performance of the parties' contractual obligations is halted. If termination of the contract is accomplished by the will of only one party, rather than by mutual agreement, the terminating party will generally take one of two courses of action. He may either seek damages against the non-terminating party based on such party's actions that led to the decision to terminate or he may defend himself against a claim for monies owed pursuant to the contract.
Termination of a contract is an extreme measure, which is generally reserved for situations where the non-terminating party's performance cannot be cured or when the parties' relationship has so broken down that to demand continued performance under the contract would be futile. To avoid negative ramifications from the decision to terminate, the terminating party must show that he had just cause to do so. Particularly, he must prove that he did not waive his right to terminate, that he did not materially breach the contract or contribute to the circumstances causing the breach, that the non-terminating party was given adequate notice of the intention to terminate as well as given the opportunity to cure the termination circumstances, that he did not interfere with the non-terminating party's performance under the contract, and that he had not already substantially performed under the contract.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.