Can contracts be terminated at a company’s convenience?

Doing business contractually offers you and your company a good deal of security. That sense of security can quickly evaporate were you to know that a client in Cary can walk away from an agreement with you whenever it believes it is in their best interest to do so. 

This likely flies in the face of the assumption that you and most others have regarding contract law (that being that you must give a partner cause in order to terminate a contract early). Yet the principle of “termination for convenience” is very real, and one that you should be familiar with to know how to make the most of a scenario where a partner invokes it. 

Who can terminate contracts for convenience? 

Technically any company can terminate a contract for its convenience if afforded that right. According to the Congressional Research Service, that right is automatically afforded to government agencies. A private company can only terminate a contract for convenience if you agreed to give it that right when negotiating your contract. 

Come of the more common reasons a partner may cite when ending a contract for convenience may be: 

• No longer needing the product or service your company provides 
• Securing the ability to provide that same product or service in-house 
• Your company refusing to renegotiate the contract’s terms 
• A general breakdown in your business relationship 

What are you entitled to?  

When your partner ends your contract for its convenience, the most pressing question is what is your company entitled to? You can collect for any goods or services provided up to that point, as well as the expenses associated with having to prematurely end your business. If you can show that your now-former partner originally negotiated your agreement in bad faith, you may be able to pursue damages for breach of contract.