Cian BrennanFounder, Quantum Contract Solutions · Founder

How to get out of a construction contract

Name: How to get out of a construction contract
Uploaded: 2023-02-14T00:00:12+00:00
Duration: 38 s
Channel: Cian Brennan
Description: In this segment, the speaker explains that construction contracts often give clients broad powers to terminate the agreement—either for convenience or…

14 Feb 2023 · 1 min

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In this segment, the speaker explains that construction contracts often give clients broad powers to terminate the agreement—either for convenience or for default—while contractors may have little or no right to do the same. He points out that many contracts lack a clause allowing the contractor to terminate the client, leaving the contractor vulnerable if the client fails to pay or otherwise breaches the contract. To protect themselves, contractors should ensure the contract includes a reciprocal termination clause, which grants them the ability to terminate the client if the client does not comply with contractual obligations, such as timely payment. This reciprocal clause serves as an “escape hatch,” enabling contractors to exit the contract under specified breach conditions.

Chapters

You need to make sure that your construction contract has this included. So your client will have a myriad of ways to terminate you on a construction contract. So they could terminate you for convenience, they could terminate you for default. When you actually read that clause, sometimes you cannot terminate them. There's no— it's just blank on your— how you can terminate them. So what you can do is you can find yourself in a situation where they haven't paid you and you have to keep working, potentially. So you need to make sure that that termination clause has a— what's called a reciprocal termination, which means that you you can terminate them if they don't comply with the contract. If you do that, you've got an escape hatch and you can get out of the contract if, for example, they don't pay you.