Like most business owners and representatives in Denton, you likely assume that a contracted partner cannot pull out of an agreement unless your company has given it cause to do so. Thus, your surprise and shock is understandable when one tries to simply terminate your contract at its discretion. Many in your same position have come to us here at Kelsey, Kelsey & Hickey, Attorneys at Law asking if such an action is indeed lawful. The answer to that question depends on one of two factors: the nature of your partner’s work or the actual terms of your contract.

According to the Congressional Research Service, government agencies are automatically afforded the right to end contracts at their convenience. Some of the common reasons why such an entity would end a contract with you may include:

  • Securing the ability to provide your product or service in-house
  • Your company ceasing to be eligible to fulfill the contract
  • Ethical concerns over the propriety of your company being awarded the contract
  • A general deterioration in your business relationship

The same right of termination for convenience is not given to private companies. You can choose to grant it to such a company, however, if you believe it to be in your business’ best interest to do so (such as a concession afforded in order to land a high-profile client).

No matter the nature of the work that your contracted partner does, you can typically only collect the same thing when a client ends a contract for its convenience: compensation for whatever work your company has thus far completed. Damages for breach of contract are typically only available if you are able to prove that your partner initially negotiated with you in bad faith.

More information on dealing with contractual agreements can be found throughout our site.