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Contract Termination and Excusable Delay

Contract Termination and Excusable Delay. Contract Termination and Excusable Delay. Definition: An action taken pursuant to a contract clause in which the contracting officer unilaterally ends all of part of the work. Types of terminations:

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Contract Termination and Excusable Delay

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  1. Contract Termination and Excusable Delay

  2. Contract Termination and Excusable Delay • Definition: An action taken pursuant to a contract clause in which the contracting officer unilaterally ends all of part of the work. • Types of terminations: • Termination for convenience- in the best interest of the government • Termination for Cause/Default- Contractor has not performed • Cancellation- There is no longer a need for the work

  3. Contract Termination and Excusable Delay • Termination for Cause/Default can be for: • Failure to perform • Failure to adhere to schedule • Failure to comply with specific terms and conditions • Failure to comply with other terms and conditions in contract • Repudiation- “just ain’t gonna do it”

  4. Contract Termination and Excusable Delay • Commercial Contract Termination: • UCC Section 2-309 • Requires good faith of all parties • Notice given in reasonable time • Insures other party received unless: • Contract states that in breach or specific cause no notice agreement will be provided • Termination by mutual consent • Bilateral Agreement required

  5. Contract Termination and Excusable Delay • Government Contract Termination • FAR 49- identifies government terminations except commercial items subject to FAR 12 • Basically 2 types: • Convenience: • Contract no longer serves the best interest of the government due to priorities, end of program, downsizing, other significant events not anticipated • Default: • Contractor failed to perform one or more actions required in the contract • General rule: No prior notice entitlement unless contract provision requires it.

  6. Contract Termination and Excusable Delay • Notices if required: • Cure Notice: states that contractor will be subject to default termination unless it corrects a specific contract noncompliance or makes necessary progress to meet the delivery schedule • Show Cause Notice: asks for explanation of why the contractor should not be terminated for default and affords the contractor an opportunity to “show cause” as to why a termination for default should not be assessed. • No Cost Termination: issued if the requirement no longer exists and the contractor is not liable to the government for damages the contracting officer may execute a “no-cost termination settlement” FAR 49.402-4

  7. Contract Termination and Excusable Delay • Government: • Excusable Delay :Protects the contractor from penalty for • Acts of God or public enemy • Acts of the Government in either its sovereign or contractual capacity • Fire • Flood • Quarantine • Strikes • Epidemics • Unusual Severe Weather • Freight Embargos • Commercial • Force Majeure (Superior Force) protects the contractor from unexpected or uncontrollable event that upsets the plan.

  8. Contract Termination and Excusable Delay • Contract Cancellation • Usually occurs shortly after contract execution • Seller realizes they cannot perform • No cost to either party • Buyer can find other source

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