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Construction contracts and termination issues can be highly complex. Express provisions within the construction contracts are often reviewed alongside details such as delays in completion, failure to meet quality standards, material breaches, financial breaches (non-payment), bankruptcy, repudiation, or subcontractor disputes. Additional factors such as performance are also assessed in construction termination cases. For example, if a project is considered substantially complete, courts may be less inclined to find termination lawful, even if there is a technical breach. Also, if factors beyond a party’s control make contract completion impossible, termination may be justified.
Courts typically require that the terminating party provide proper notice to the other party, outlining the grounds for termination and allowing for a reasonable opportunity to cure any breaches. Courts assess whether the termination was done in good faith, meaning it was not motivated by a desire to avoid contractual obligations or gain an unfair advantage.
If a termination is found to be unlawful, the wrongfully terminated party may be entitled to damages, including Lost profits or costs incurred.
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