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: 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

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”

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

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.

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

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.

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