What does termination for convenience mean for my subcontract?
It means your main contractor can end your subcontract without any default by you, but only where your subcontract says so.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
The standard JCT contracts have no such clause. It usually comes from amended or bespoke terms, often copied down from the main contract. Without one, ending your subcontract for no good reason is likely to be a breach. With one, the question becomes what you are paid. Most clauses pay for the work done to the termination date and the materials ordered for the job. Many also cover the cost of leaving site. Some pay part of the profit you would have made on the work left, and some expressly exclude it. So read the payment part of the clause first. Then record the works, materials and plant as they stood on the termination day. Value the work done, gather the cancellation charges and the cost of leaving site, and set out any lost profit the clause allows. Whether the clause was used properly is a question for your solicitor. The account itself is built from your own records.
Example
Illustrative example. The scenario and figures are invented.
The facts
A curtain walling subcontractor is 60 per cent through a £900,000 package when its main contractor ends the subcontract for convenience. The clause pays for work done, materials ordered, demobilisation and 5 per cent of the value of the work left.
What happens
- The works, the stored units and the plant are recorded on the termination day.
- The work done is valued at £540,000, against £470,000 already paid, leaving £70,000.
- The glazed units ordered for the rest of the job carry a supplier's cancellation charge of £38,000.
- Demobilisation costs £9,000, from the hire and transport invoices.
- The clause allows 5 per cent of the £360,000 of work left: £18,000.
The account in figures
| Item | Amount |
|---|---|
| Work done, unpaid | £70,000 |
| Cancellation charges on materials ordered | £38,000 |
| Demobilisation | £9,000 |
| Profit on the work left, as the clause allows | £18,000 |
| Account | £135,000 |
The outcome
The account goes in at £135,000, each line traced to a document. The main contractor agrees £131,000, disputing only £4,000 of the demobilisation.
To have the account after a termination for convenience built and pursued, see our Termination Claim service.