Termination of construction contracts. Is breaking up hard to do?
Updated: Jan 17, 2019
The value of construction disputes is said to have increased by more than 35% since 2015 according to Arcadis Global Construction Disputes Report 2017: Avoiding the Same Pitfalls.
The two chief causes of the increase were a failure to properly administer the contract and understand or comply with contractual obligations.
Termination is very commonly the cause of disputes. It is a very critical contractual remedy which is not exercised early enough or with proper consideration and so generates large numbers of claims each year. It is however a way to achieve a clean break and retain mutual respect if done properly.
The parties need to keep their termination differences to themselves and not to involve third parties in discussions about their intentions. Involving third parties to carry out services under the contract will most likely lead to a claim for breach and evidence an intention for the party to no longer be bound by the agreement.
It is critical to follow the contractual process for termination and draft the often-needed pre-termination warnings of termination.
If termination is used as a considered step in accordance with the contract terms, then it can benefit both parties and the project. However, it is not without risk and the unwary will expose themselves to claims if they do not consider the risks at each stage of the process.
For more information on terminating a construction contract contact our construction expert Christopher Cox - firstname.lastname@example.org.
If you would like to learn more please call Cox Minhas & Co on 01604 973977.