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Explaining the concept of “termination for convenience”

On Behalf of | Apr 13, 2018 | Business Litigation

The relative health of a company in City of Industry can often be gauged by the types of contracts it holds. Government contracts in particular are highly valued, which is why so many companies come to us here at The Wang IP Law Group PC after such agreements are broken inquiring as to what legal recourse might be available to them. If you lose such a contract for reasons you view to be unjustified, the desire to maintain your company’s good reputation might prompt you to ask the same question. You should know, however, that government entities are often afforded a great deal of leeway when it comes to getting out of contracts. 

The law allows such entities the right to terminate contracts “for convenience.” This basically means that your government partner can walk from your agreement if it believes it is in its best interest to do so without being subject to violations for breach of contract. According to the Congressional Research Service, federal courts have determined common scenarios where a government entity’s interest may be compromised to be: 

  • If it no longer needs the goods or services secured by your contract
  • If you refuse its request to modify the contract
  • If it questions the continued performance of the contract
  • If you become ineligible to fill the contract
  • If your relationship has deteriorated 
  • If it believes it has the capacity to provide the goods or services in-house

You may still be able to hold your government partner accountable for ending your contract. To do, you would need to show that it likely operated in bad faith in that in never intended to respect the term of the agreement. More information on your potential remedies for breach of contract can be found on our site.