What is the difference between terminating a contract “for a cause” and terminating the contract “for convenience”? Give examples of both contract and APA sitation references
Short answer:
Termination “for cause” (also called termination for default) occurs when one party breaches the contract or fails to meet specified obligations, allowing the non‑breaching party to end the contract and seek remedies. Termination “for convenience” allows a contracting party (often the owner or purchaser) to end the contract without attributing fault to the other party, typically providing limited compensation for work performed and certain close‑out costs.
Key differences
Grounds:
For cause = specific breach or failure to perform. For convenience = no breach required; permissive right of the party holding the clause.
Burden of proof:
For cause = non‑breaching party must show the other party’s default. For convenience = no default needed.
Remedies and payments:
For cause = damages, possible set‑off for costs to complete, and withholding of payments; contractor may be liable for excess costs. For convenience = typically pay for work performed, reasonable close‑out costs, and sometimes a termination fee; contractor generally not liable for damages for being terminated.
Effect on contractor’s record:
For cause may be recorded as default or breach; for convenience is usually neutral (administrative termination).
Examples of typical contract clause language
Termination for cause (example)
“Termination for Default. If the Contractor fails to perform the Work in accordance with this Agreement, or otherwise breaches any material term of this Agreement, the Owner may, by written notice, terminate this Agreement for cause. In the event of such termination, the Contractor shall be liable for all direct damages, including the cost of completing the Work and any increased costs incurred by the Owner.”
Termination for convenience (example)
“Termination for Convenience. The Owner may terminate this Agreement, in whole or in part, at any time without cause by providing written notice to the Contractor. In the event of termination for convenience, the Owner shall pay the Contractor for: (a) Work performed to the date of termination, (b) reasonable demobilization and close‑out costs, and (c) profit on the Work performed, but not for anticipated profits on unperformed Work.”
Practical illustrations
For cause:
A construction contractor abandons the site or repeatedly misses critical milestones despite cure notices — owner terminates for cause and hires a replacement; owner seeks the cost difference from the original contractor.
For convenience:
An agency cancels a project due to budget cuts and terminates the contractor for convenience; the contractor is paid for work done and reasonable termination costs but is not penalized for breach.
Examples of APA citation references (examples and templates)
Below are sample APA‑style references you can adapt to cite contract documents and common regulatory sources. Replace years, titles, contract numbers, and URLs as appropriate for your specific source.
Contract document (example APA citation)
Company or Author Name. (Year). Title of contract or agreement (Contract No. ####). Unpublished contract.
Example:
Acme Construction, Inc. (2022). Construction services agreement (Contract No. ACME‑2022‑001). Unpublished contract.
Government regulation or clause (example APA citation)
When citing a federal regulation such as the Federal Acquisition Regulation (FAR), provide the regulation title, citation, year if applicable, and URL.
Example:
Federal Acquisition Regulation. (2021). 48 C.F.R. § 52.249‑2 (Termination for Convenience of the Government, Fixed‑Price). Retrieved from https://www.acquisition.gov
Secondary source (treatise or textbook) (example APA citation)
Author, A. A. (Year). Title of work: Subtitle if any (edition if given). Publisher.
Example:
Smith, J. L. (2019). Contract remedies and administration (2nd ed.). Legal Publishers.
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