Category Contract Disputes, Firm News

Can Government Partners End Contracts At Their Convenience?

Working with government partners in Parsippany offers you and your company a certain sense of stability. Such agencies can often be more reliable than private organizations in meeting contractual terms. However, they are also afforded more rights when it comes to getting out of professional agreements. One of those is the ability to terminate a contract “for convenience.”

What is termination for convenience? Simply put, it allows your government partner to walk away from your agreement if it believes it is in its best interest to do so. This differs from termination by default, which is where either you or your partner fail to deliver the consideration promised in your contract.

You might think trying to terminate a contract for convenience equates to terminating it without cause (which would entitle you to pursue a claim for breach of contract). However, all your government partner needs to do is cite its reason for ending the agreement as cause. It could be due to a deterioration in your relationship, your refusal to renegotiate your contract, or it considering the cost of your goods or services too high. In any event, you would not be able to claim breach of contract (unless you were somehow able to prove the agency negotiated the deal in bad faith).

Having your contract terminated for convenience does not mean that you will not get paid. According to the Congressional Research Service, you are entitled to a termination settlement for the work you have done so far. Your partner may also only decide to terminate a certain portion of your agreement, in which case it would continue to pay for that which you still provide, as well as for the completed work you have already done and the costs associated with restructuring your service package.

 

Outside General Counsel Solutions

If you would like more information on this issue or if you are a small business owner in need of guidance, please contact us today. At Santomassimo Davis LLP, our team of lawyers, experienced in compliance, can help effectively minimize your company’s risk and avoid the unnecessary liabilities many businesses unknowingly face.

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