Construction contracts typically include provisions that allow a client to cancel in the event of a breach of contract. Cancellation clauses are intended to prevent clients with a remedy in the event that a contractor’s breach makes project completion infeasible.
Advance Notice of Termination
Many termination clauses require that the client provide notice to the contractor that it is in breach of contract and provide it with an opportunity to cure the breach. The right to cure typically has a limited timeframe.
Some contractor termination clauses address timely performance. If a contractor fails to meet certain milestones in the completion of a project, a client can send notice requesting that the contractor employ extraordinary measures to get the project back on schedule or the project will be canceled.
Many standard AIA© construction contracts condition the acceptance of work on the approval of an architect, project manager, or engineer. If this authorized party cites fault in the work that has been completed, then a payment requisition will not be approved, and the client may cancel the contract if the contractor fails to remedy the deficient work.
Many contracts’ terms require that contractors carry a certain amount of liability insurance and workers compensation over the duration of a project. If insurance is canceled or lapses, then a client may have the right to terminate the contract.