For those companies in Florida about to enter into contract negotiations with a new client, a number of different factors merit consideration. One that few many deem necessary to ponder is the potential for terminating the contract prematurely.
Many might consider such a concern unnecessary, as the only a party can terminate a contract early is if their partner gives them cause to do so. At least, that is the assumption of many of the clients that come to our team here at Parjus Law. However, a legal principle exists known as “termination for convenience.” The question then becomes how to approach this potential when negotiating an agreement.
Understanding termination for convenience
Essentially, termination for convenience allows a contracted party to walk away from an agreement when it believes it to be in their best interest to do so. According to the Congressional Research Service, public agencies (government entities and the like) automatically have the privilege of doing this. Private companies, however, can only cite this benefit if their partners concede the privilege during contract negotiations.
When it comes to entering into a contract with either of these parties, a company should carefully consider several factors. While a public agency’s automatic right to terminate contracts for convenience might seem a deterrent to working with them, their stability (relative to private parties in the same space) might offset that risk. Along the same lines, the ability to work with a renowned private partner (and the renown that may come with it) might make conceding the right of termination for convenience worth it.
Seeking legal recourse
One should also consider potential legal recourse should their partner exercise their rights. While breach of contract may be unavailable, one can seek relief for expenses incurred as well as any potential damage to a company’s reputation.