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What does “termination for convenience” mean?

On Behalf of | Jun 22, 2018 | Business And Corporate Law |

Say that you have a contract with a business partner in Hazlehurst. One day, out of the blue, you receive a communication that said partner is terminating your agreement. It does not offer any reason that would qualify as cause for ending a contract, but rather cites that it is ending the deal for its convenience. Can a contracted partner legally do that? 

The answer to that question depends on the type of company you are dealing with. “Termination for convenience” happens when one side to a contractual agreement chooses to end the agreement solely because it believes it is in its best interest to do. This flies in the face of traditional thinking when it comes to contract law, which typically assumes that a party must cite a cause or be at risk of being in breach of contract

Per the Congressional Research Service, however, government agencies inherently have the right to end contracts for convenience. Some of the more common reasons listed as to why such a partner might end its agreement with you include: 

  • No longer requiring the services or goods you offer
  • Gaining the ability to provide the same goods or services “in-house”
  • Questions regarding your company’s performance
  • You refusing to re-structure the terms of the agreement

In general, any sign of deterioration in your working relationship may enough to justify it ending your agreement. Should your contract end in this way, you are still entitled to any payment due to you for work already rendered, along with compensation for expenses related to ending your work. 

The same right is to terminate contracts for convenience is not afford to private companies. It must be granted in the terms of the contract itself.