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Reviewing the reasons for terminating contracts

As a contractor, you rely heavily on the strength of your contractual agreements to not only guarantee continued work, but also to reinforce your reputation in the local community. When you enter into a contract with a client, you do so with every expectation that as long as you fulfill your terms, the other party will have no reason to end your agreement (or to not reciprocate). Are there any scenarios where it can do just that? 

According to the American Bar Association, a client can attempt to end a contractual agreement for default (many also refer to this as "termination for cause"). To cite cause as a reason for termination, your client has to prove that your default has essentially defeated the basic objective of the contract. To do this, it must prove the following elements: 

  • That you had an obligation to fulfill under your agreement
  • That the obligation was a material term
  • That you indeed did fail to perform that obligation
  • That it (the client) fulfilled all of its responsibilities under the contract

If your client had no cause to terminate your contract yet still attempted to do so, then it is said to be terminating the contract for convenience. Contracts can typically only be ended this way when there is actual language in its terms that allows for it. Even then, you may still be able to bring action for breach of contract if you can show your client acted in bad faith. More information on enforcing contracts can be found by continuing to browse through our site. 

 

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