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Understanding “termination for convenience”

On Behalf of | Jan 4, 2020 | Business

When your business contracts with government agencies in Denton, you often enjoy more security in such a relationship than you may with private organizations given that such agencies often do not have to worry about a lack of resources. Yet working with the government brings with it its own unique set of challenges, one among them being the freedom that they are afforded with dealing with contracts. Many business representatives in your same situation have come to us here at Alagood Cartwright Burke PC after having seen their government partners end their business agreements for seemingly no reason at all. Their question is typically the same you have when facing such a scenario: is this legal?

Unfortunately, it is, thanks to the legal philosophy of “termination for convenience.” While you (like most) assume that a contracted partner has to have cause in order to end a contract, government agencies are automatically afforded the right to end such agreements at their convenience. Per the Congressional Research Service, common reasons government partners may end contracts under this scenario may be:

  • You refusing to renegotiate the terms of your company’s contract
  • The agency acquiring the means to provide the services or products you supply in-house
  • Questions arising regarding your company’s performance in fulfilling the contract
  • An overall deterioration in your business relationship

Typically, when a contracted partner lawfully ends an agreement for its convenience, all you are entitled to collect are the costs for any services already rendered as well as expenses associated with ending the agreement. However, if you are able to show that your government partner initially negotiated your agreement in bad faith, you may be able to seek damages for breach of contract. You can learn more about dealing with contract disputes by continuing to explore our site.