Projects will sometimes go wrong and situations arise where a party wishes to terminate a contract – for example, a contractor is not performing as it should, and so the employer wishes to engage a different contractor to finish the job.

An employer generally has two potential routes to terminate the contract, either for:

• A repudiatory breach (at common law). This is where a breach is sufficiently serious to deprive the innocent party of substantially the whole benefit it was to obtain under the contract. This can be quite a high bar. A party will generally have a common law right to terminate for a repudiatory breach unless excluded by clear words in the contract.
• By exercising a contractual right to terminate. The right to terminate and the consequences will depend on what is set out in the contract.

Read more …