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Who can terminate contracts for their convenience?

On Behalf of | May 16, 2019 | Business Law

Winning a contract with a government agency in Indianapolis often brings with it a great deal of security. Unlike many private companies, government organization typically have the resource backing needed to ensure that the issue of compensation for your work is something you will not have to worry about. Yet government partners bring their own unique challenges to any contractual situation. Chief among these is the freedom they are given in canceling agreements for their convenience. 

A partner being able to end a business agreement simply because it believes it to be in its best interests to do so may fly in the face of everything that you think you know about contract law. Yet termination for convenience is right at that is automatically afforded to government agencies. The Congressional Research Service lists the following as common reasons why a government partner might choose to invoke this benefit: 

  • It has asked you to renegotiate your contract, yet you are unwilling to do so
  • It has developed the capacity to perform the services you provide in-house
  • It no longer needs the services that you provide
  • Questions have arisen as to your eligibility to propriety of you being awarded the contract
  • You no longer being eligible to provide the services needed
  • A simple breakdown or deterioration of your business relationship

If and when a government contract is ended for your partner’s convenience, you are still entitled to collect for whatever services you have already provided, as well as whatever funds are needed to discontinue your service. Suing for breach of contract might also be a possibility if you are somehow able to prove that your partner never intended to fulfill its agreement with you in the first place. 


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