In construction projects, contracts hold key importance. They include all the terms related to the project process and are legally binding for all the parties involved in the project, which include the owner, project manager, and the contractor.
When any of the parties indulge in an act that violates any of the terms of the construction contract, the party on the brunt of bearing consequences can claim the breach. The aggrieved party can, in some circumstances, demand the termination of the contract altogether.
Whether the contract continues or requires termination, you will need the services of an expert witness. Thus you must keep a construction consultancy in the loop for acquiring the services ofa quantum and a delay expert to ensure the matters settle down without reaching the court.
This article aims to introduce you to the kinds of breaches thatmay lead the contract towards termination.
Three causes of contract breaches and termination in construction
Contract termination is one thing you, as a project owner, would try your best to avoid. But sometimes it becomes unavoidable. When the cause of the breach of contract is clear, the probability of avoiding the contract termination increases.
Main causes behind the termination of construction contracts are as follows:
Sometimes one of the parties of the contractual agreement fails to fulfill its obligations towards the contract. If, as a result of the breach, one of the parties begins to behave like they are no more obliged to the terms of the contract, it is called repudiation breach.
This kind of breach allows the innocent party to claim that it is no longer any obligation to continue working as a signatory under obligation to the terms of the contract. This is sometimes justified as all parties are equally responsible for adhering to the terms of the contract.
Contracts of some construction projects allow you to terminate the project for convenience. This is often useful for the project owner. This is the leverage that only the client or the project owner enjoys. Other parties are still aggrieved.
The party at convenience will have to face claims by other parties, and thus you must hire quantum and delay experts to deal with those claims effectively. These kinds of breaches occur in only a select few kinds of contracts.
Sometimes the contract is just impossible to carry along and continue with owing to a certain event or circumstance. It becomes a frustration for all parties despite the fact that none of the parties is at fault. In these cases, the contract comes to an end, and no party has to face a penalty for a breach. The conditions of frustration are difficult to establish if not predefined in the contract. Some of the events which may lead to frustration include unforeseen restriction posed by the government on the building or cancellation of any event of crucial importance to continue the contract and construction process.
About to start your construction project?
Make sure the terms of the contract are comprehensive as well as detailed. It should include the details as to how the contractor should deal with all kinds of claims. It should be composed of contingency and back up plans for all kinds of delays, including critical, non-critical, compensable, non-compensable, excusable, and inexcusable delays.
A well-drafted and comprehensive contract saves you from the hassle and there are higher chances of project completion according to the original schedule and contractual conditions.
Optimize your project’s contract so that the affairs do not reach the point of termination at any point.