Construction Contract Termination at a Glance

When am I allowed to terminate my construction contract?

You may terminate your construction contract:

  1. When you and your contractor agree to terminate it.
  2. When your construction contract contains a termination clause.
  3. When your contractor commits breach of contract.
  4. When your contractor repudiates the contract. 

A Quick Look at Each Mode of Termination

Termination by Agreement

You and your contractor may come to an agreement to terminate the contact, either expressly or impliedly. An express agreement to terminate may be done orally or in writing, although the latter would be advisable. An implied agreement would require clear, unmistakable conduct showing that neither you nor your contractor require each other to proceed with the obligations imposed by your contract. 

Termination Clause

Most construction contracts contain several clauses pertaining to termination. In fact, the standard form contracts in NSW such as those issued by:

all contain termination clauses.

These termination clauses give you the power to unilaterally terminate the contract when your builder or contractor commits breach. Additionally, they lay out the

that are needed to effect a valid termination – like the service of Notice of Breach and Notice of Termination.

Termination for Breach of Contract

Regardless of whether your contract contains a termination clause or not, you may nevertheless terminate it when your contractor commits a  breach of:

Essential Terms of Termination for Breach of Contract

Termination for Repudiation of Contract

Repudiation occurs when one party, by their conduct, shows that they are unwilling or unable to proceed with their obligations under the contract. Similar to termination due to breach, termination for repudiation does not require that there be a termination clause in the contract.

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