Termination & Suspension of Construction Works

Yes, we offer free initial consultations to clients during which you will discuss your construction related dispute with one of our expert lawyers to determine the scope of the issue, the solutions and how we may be able to assist in achieving the best outcome for you.

Our expert lawyers are experienced in both contentious including payment disputes, breach of contract and defective work and non-contentious construction related issues and will be able to provide you with expert advice on your concern. Please do not hesitate to book a free initial consultation with one of our lawyers today.

Termination and suspension both relate to stopping works on a construction project, but they differ in intent and duration.

• Termination: This refers to the ending of a construction contract before the completion of the works. Once terminated, the contract cannot continue unless a new contract is entered into. Termination can be due to various reasons like a breach by either party, insolvency, or mutual agreement. The construction contract will usually set out the circumstances in which it can be terminated.
• Suspension: This is a temporary halt in the progress of the works. It can be initiated by either party under specific conditions set out in the contract. A suspension can often be lifted, allowing the works to continue based on terms stipulated in the contract.

Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.

A party can terminate a construction contract under various circumstances, typically stipulated in the contract itself. Common grounds for termination include:

• Breach of contract terms, such as failure to pay or failure to perform.
• Persistent delays or substandard work by the contractor.
• Insolvency or bankruptcy of either party.
• Force majeure events that make the continuation of the project impossible.
• Mutual agreement between the parties.

If a construction contract has been terminated and wish to explore your options, please do not hesitate to contact us for a Free Consultation to discuss your legal issue.

Common grounds for suspending works include:

• Non-payment or delayed payment by the employer.
• Health and safety concerns on the construction site.
• Adverse weather conditions making it unsafe or impossible to proceed.
• Awaiting further instructions or decisions from the employer.
• Issues with third parties, like local authorities or adjacent property owners.

Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.

Yes, in many standard construction contracts, if the employer or client fails to pay the contractor by the stipulated deadline, the contractor may have the right to suspend works after giving notice. However, specific conditions and notice periods might apply, which should be checked in the terms of the construction contract. Suspension for non-payment is a way for contractors to manage financial risks, but it is crucial to ensure all contractual procedures are followed to avoid potential breaches.

Case Example: Contractor B did not receive the agreed payment for completed milestones per the Payment Applications submitted. After providing the necessary notice and waiting the specified period without receiving payment, they suspended the works. After resolving the payment issues, works resumed under the original contract.

For clear guidance on your rights and responsibilities regarding termination and suspension in construction contracts, our expert lawyers are here to help. Ensure you make informed decisions by scheduling a free consultation with our team today.

To validly execute a termination or suspension, parties should:

• Review the Contract: Ensure a thorough understanding of the specific clauses and conditions related to termination and suspension. Different contracts may have varying requirements.
• Provide Notice: Almost all contracts will require written notice to be given to the other party, specifying the reasons for the proposed termination or suspension.
• Follow Stipulated Procedures: Contracts might outline certain steps or procedures to be followed before termination or suspension can take effect, like dispute resolution mechanisms or waiting periods.

Case Example: Company A wanted to suspend works due to non-payment. They reviewed their contract, followed the notice provisions accurately, and only suspended works after the specified waiting period, ensuring the suspension was valid.

Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.

Wrongful termination or suspension can lead to:

• Damages: The aggrieved party may claim for losses incurred due to the wrongful act.
• Reinstatement: In certain cases, especially wrongful termination, the contract might be reinstated by a court or arbitrator.
• Reputation Damage: A wrongful act can tarnish the reputation of the party in the industry.
• Additional Costs: These can arise due to delays, re-contracting, or legal disputes.

If you have any concerns about termination or suspension of construction works, please do not hesitate to call us for a Free Consultation.

Typically, yes. Most construction contracts require a party wishing to terminate or suspend to first provide notice to the other party. The specific notice period and its requirements will depend on the terms of the contract.

Yes. If a party wrongfully terminates or suspends works, the aggrieved party can typically claim damages for losses incurred. This might include loss of profit, additional costs, or other foreseeable losses directly linked to the wrongful act.

Case Example: Contractor B was wrongfully terminated by the employer without valid grounds. They claimed and were awarded damages for the loss of profit they would have made had the contract been completed which equated to over £100k.

Navigating the intricacies of termination and suspension in construction contracts requires expert guidance. Our experienced construction lawyers can assist in ensuring your actions are valid and protect your interests. Schedule a free consultation with our team today to discuss any concerns or questions you might have.

Yes, in England & Wales, while parties are generally free to negotiate their terms, the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) provides certain implied terms if the contract does not address specific issues.

For instance, if a construction contract does not include adequate provisions for payment, the statutory scheme will apply. While the primary focus is on payment and adjudication, the principles set out in the Act can indirectly influence termination and suspension rights, especially in cases of non-payment.

Typically, yes. Most construction contracts include clauses that allow for termination if one party consistently fails to meet stipulated quality or safety standards. The specific rights and procedures would depend on the exact wording of the contract. It is essential to act cautiously, ensuring all contractual requirements are met before terminating for this reason.

Case Example: Construction Firm C was building a residential complex. Their consistent failure to adhere to the agreed quality standards, despite multiple notices from the developer, led the developer to validly terminate the contract under its quality-related clauses.

Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.

During a suspension:

• Rights: The party that suspends work may be entitled to an extension of time, additional payment, or both, to cover the costs incurred due to the suspension.
• Obligations: Both parties usually remain bound by the contract’s terms. The suspending party typically needs to ensure the site’s safety and security, while the other party might be obliged to remedy the reason for suspension.

Disputes can be resolved through:

• Negotiation: Direct talks between parties to reach an amicable solution.
• Adjudication: A quick and temporary method specific to the construction industry, where an independent third-party (the adjudicator) gives a decision.
• Arbitration or Litigation: More formal methods involving a third-party arbitrator or court giving a binding decision.

Remedies can include damages, reinstatement of the contract, specific performance, or other equitable remedies, depending on the nature and facts of the dispute.

Navigating the complexities of termination and suspension in the construction sector requires an expert touch. If you are facing such challenges or uncertainties, do not hesitate to get in touch with our seasoned lawyers for a free consultation. We are here to guide you every step of the way.

Yes. If a party believes that the termination or suspension was unjustified or not in line with the contract terms, they can challenge the decision. The exact mechanisms to challenge will depend on the contract’s dispute resolution clauses, but commonly used methods include negotiation, adjudication, arbitration, or litigation. It is essential to act promptly, as time limits might apply.

“For cause” termination refers to ending a contract due to a specific breach or failure by one of the parties. Common reasons include failure to perform essential contractual obligations, insolvency, or other significant breaches. Such termination generally requires the breaching party to compensate the non-breaching party for damages arising from the breach.

“For convenience” termination, on the other hand, is when one party wishes to end the contract without the other party’s breach or fault. This might be due to changed circumstances, altered project priorities, or other non-fault-based reasons. Compensation in such terminations typically involves covering the costs incurred by the non-terminating party up to the termination point but does not typically cover lost profits or other consequential damages.

‘Force majeure’ clauses address unforeseeable events beyond the control of the parties, such as natural disasters, wars, or pandemics. When such events occur, performing contractual obligations might become impossible or impractical. Depending on the contract’s wording, a ‘force majeure’ event may allow for suspension or termination of the contract without incurring penalties. It is essential to review the specific terms and conditions related to ‘force majeure’ in the contract to determine the rights and responsibilities of each party during such events.

Yes, subcontractors can suspend or terminate their services based on the terms stipulated in their subcontract agreement. Common reasons for such actions by subcontractors include non-payment, unsafe working conditions, or a material breach by the main contractor. The specific rights and processes for suspension or termination will be detailed in the subcontract. It is vital for main contractors and subcontractors to understand these clauses to ensure proper compliance and mitigate potential disputes.

Both the FIDIC (International Federation of Consulting Engineers) and JCT (Joint Contracts Tribunal) provide standard forms of construction contracts with clauses addressing termination and suspension.

For instance, in FIDIC contracts, clauses typically specify the grounds and procedures for termination by both the employer and the contractor. JCT contracts also contain provisions outlining the reasons and methods for termination, including the rights and obligations of both parties following such termination.

However, it is crucial to note that these standard contracts can be tailored to fit specific projects, and parties might negotiate variations. Therefore, it is important always to refer to the actual contract used for the specific project to understand the precise terms related to termination and suspension.

Looking to navigate the complexities of construction contract terminations? Our expert lawyers can guide you through the intricacies of these contractual terms. Schedule a free consultation today to discuss your construction project needs.

Reinstating a contract post-suspension typically involves the following steps:

• Notification: The party intending to resume work after the suspension should provide proper notice to the other party, as stipulated in the contract.
• Fulfilment of Conditions: Depending on the reason for suspension, certain conditions might need to be met before resuming work. For instance, if a contractor suspended work due to non-payment, the employer might need to clear outstanding payments before work can recommence.
• Review of Timelines: Suspension could affect the project’s timelines. Parties may need to reassess and adjust the project schedule to account for the period of inactivity.
• Potential Costs: The suspending party might be entitled to additional compensation for costs incurred due to the suspension, especially if the suspension was no fault of theirs. This should be detailed in the contract.

Case Example: If a contractor suspends work due to safety concerns on site, they can reinstate the contract after the employer addresses and rectifies these concerns, ensuring a safe working environment.

Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.

‘Liquidated damages’ refer to a predetermined sum agreed upon in the contract, payable as compensation for specific breaches, commonly for delays. If a contract is suspended or terminated:

• The party responsible for the delay might still be liable for liquidated damages accrued up to the point of suspension or termination.
• If the suspension is due to the employer’s fault, the contractor might be entitled to an extension of time, potentially reducing, or eliminating liability for liquidated damages.
• In case of termination, the right to claim liquidated damages might cease from the termination date, but the parties may still be liable for damages up to that point.

The ability to hire a new contractor post-termination depends on the contract’s terms and the termination’s grounds:

• For Cause Termination: If the contractor’s breach led to termination, the employer typically can hire a new contractor immediately to complete the work.
• For Convenience Termination: If the employer terminated the contract without the contractor’s fault, there might be stipulated waiting periods or other restrictions before hiring a new contractor.
• Potential Costs: Hiring a new contractor might involve additional costs, which could be recovered from the original contractor if they were at fault.

Regardless of the situation, it is essential for the employer to keep detailed records and communicate their intentions clearly to mitigate potential legal disputes.

Considering suspending or terminating your construction contract? Our expert construction team has extensive experience and success in resolving disagreements and breach of contract disputes quickly and cost effectively to ensure that the project is not delayed and cash flow is not impacted by any dispute with a client or sub-contractor. It is important to act fast when disputes arise. Please do not hesitate to call us for a Free Consultation today.