Contract Termination
Termination is the highest-stakes decision on a contract, and the most common way a party trying to hold the other side liable ends up liable itself. This guide covers the difference between termination for cause and for convenience, how to issue a compliant termination notice under FIDIC, what a contractor can recover on termination, and how to avoid the wrongful-termination trap that flips liability onto the party that pulled the trigger.
Read these before you serve or respond to any termination notice - the basis and the procedure decide the outcome, and both must be right before the letter goes out.
In this guide
Wrongful Termination Risk - and How to Avoid Becoming the Party in Breach
8 min readTerminationWhat You Can Recover When a Contract Is Terminated
8 min readTerminationHow to Issue a Compliant Termination Notice Under FIDIC
8 min readTerminationTermination for Cause vs Termination for Convenience: Know Which One You're In
8 min readReady to act on this?
Get CALIM's help before you terminate
Free tools for this topic
Frequently asked questions
What is the difference between termination for cause and for convenience?
Termination for cause is a remedy for a defined breach and puts the financial consequences on the defaulting party, usually after a notice to correct and a cure period. Termination for convenience is a no-fault right, almost always the employer's, to end the contract for any reason, with compensation to the contractor for work done, materials, and demobilisation but typically not for loss of profit on the unperformed scope. The basis invoked decides who pays.
How do I issue a valid termination notice under FIDIC?
Follow the procedure precisely: identify a valid ground, issue the required notice to correct, allow the full cure period, document that the default persisted, and only then serve the termination notice under the relevant clause (Clause 15 for employer termination, Clause 16 for contractor termination). Skipping a step or serving early is what converts a well-founded termination into a wrongful one.
What happens if you terminate without valid grounds?
If a termination for cause is issued without a valid ground or without following the correct procedure, it may itself be wrongful. The other party can treat it as a repudiation and claim damages, which on a construction contract routinely include loss of profit on the entire remaining works. The party that intended to hold the other side liable becomes the party in breach, which is why grounds and procedure must both be confirmed first.
Get Started
Facing a termination issue right now?
The fastest answer is usually a 15-minute call with one of our senior specialists.
Which topic matters most to your business right now?
Select one to help us match you with the right specialist.