Cancellation, Termination, Stop Work
Every contract should provide the one purchasing the work with the right to cancel, terminate, and/or stop the work. These clauses define the rights of the parties in case of a termination or stop work order. The rights of the parties will differ depending upon the type of contract. Normally, the contractor is paid for work performed up to the time of termination and costs associated with terminating the contract and subcontract. The Government termination clauses specifically spell out the rights of the contractor to recovery upon termination, as well as what the Contractor is required to do under a stop order.
Are there different types of terminations?
Yes. Normally, there is both the right to terminate for convenience at the option of the purchaser (called a “T for C”) and to terminate for default (“T for D”).
Does Virginia Tech have any special requirements for termination?
Yes. The University’s standard research agreement allows the Sponsor to terminate the work upon 60 days prior written notice. This can be reduced to a 30 day notice, which is the minimum time needed by the University to reassign faculty, staff, and students. The University reserves the right to terminate for convenience if circumstances beyond its reasonable control preclude continuation of the research.
What exception should be taken to cancellation clauses that do not provide for at least a 30-day written notice of termination?
Virginia Tech requires at least a 30-day written notice of termination. This time is necessary for the university to reassign faculty, staff and students who are working on the research.
What items should be considered in reviewing termination clauses?
- Make sure the appropriate clause is included in government contracts and subcontracts. There are different FAR clauses for different types of contracts (cost reimbursement, fixed price, etc.)
- Do not accept a blanket T for C clause in a subcontract from a prime contractor on federal contracts. Our subcontract should only include the right of the prime to terminate for convenience if the prime has been terminated for convenience by the government.
- In default termination clauses, make sure there is a written notice and at least 10 days (better 30) for us to correct the deficiency after written notice has been received before the contract can be terminated.
Last update: September 24, 2002
|