Termination of Contract

C.S.Suryawanshi, Former Chief Engineer & Joint Secretary P.W.D) Senior Consultant Mumbai.

Life is good at the beginning of every new construction project. Owners anticipate the project finishing on time and under budget and contractors expect timely payments and a healthy profit at the end of the day.

Unfortunately, the parties' expectations are often shattered at some point in the project and one party is confronted with the unpleasant dilemma of terminating the contract. Contract termination occurs when one party ends a contract before it has been fully performed. Termination can occur by mutual agreement of the parties or one party's exercise of a contractual right to terminate the contract. In the construction industry, contract termination usually takes one of two forms, termination for convenience or termination for cause. Regardless of how it occurs, it is important to understand your contract's termination provisions to determine (1) what conditions (if any) must be satisfied before a contract can be terminated, (2) what are your rights if a contract is terminated, and (3) what steps, if any, you must take to preserve a claim for compensation.

The paper explains the position in the light of the provisions in old FIDIC (Conditions of Contract, Fourth Edition reprint 1992)

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