FAQs

The following FAQs are addressed below:

• Can the client terminate, appoint another contractor and charge the additional cost to the original contractor if they are already 6 months late on the project?
• Where the breach is also repudiatory, should the client terminate under the contract or accept the repudiatory breach?

Can the client terminate, appoint another contractor and charge the additional cost to the original contractor if they are already 6 months late on the project?

The starting point is the contract, to examine whether a contractual right to terminate in such circumstances exists. If there is a termination clause, care must be given to interpreting its provisions to determine whether the preconditions to the right to termination are made out, and if so, to ensure that any procedural steps (for example, the giving of notices) are complied with.

The additional cost involved in terminating and appointing another contractor to finish the work may be recoverable from the original contractor under the terms of the termination clause.
Where no contractual right to terminate exists, the client may have a right at common law to treat the contract as discharged. Reference should be made to whether the contractor's breach (if any) is of a repudiatory nature, such that it gives rise to a right to terminate the contract.

In general, delay on the part of the contractor will not entitle the client to terminate the contract unless it is sufficiently serious that it demonstrates the contractor's unwillingness or inability to carry out the work. It should be remembered that this is a high test, and that only serious delay will give rise to such a conclusion. Alternatively, where time is 'of the essence' either because the completion date is a condition of the contract or upon the giving of a notice, the client may be entitled to terminate for delay. However, very careful consideration should be given before terminating, due to the potential for the client themselves to be in repudiatory breach if they terminate illegally.

Where the client terminates for repudiatory breach they will be able to claim damages from the contractor, to include the additional cost of engaging others to complete the works.

Where the breach is also repudiatory, should the client terminate under the contract or accept the repudiatory breach?

Again, the starting point is the contract to see whether the termination clause provides that the contractual right it confers is to be the exclusive remedy available for the breach in question.

Assuming that the contract does not so provide, the client has the option of either remedy.