Termination for Convenience Clauses in Building Construction and Infrastructure Contracts

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1. Infrastructure, building and construction contracts often contain so called “termination for convenience” provisions, operating independently of breach, default or frustration. Termination of a contract has been considered as the legal consequence of certain kinds of breach, repudiation or frustration. Frustration is automatic. Breach and repudiation arise where default has occurred. 2. Provisions for termination at the convenience of, or at the will of the contracting parties, or any one or more of them, have become known as “termination for convenience provisions” (referred to in this paper as “TFC”) or “termination at will” provisions. 3. TFC can be invoked in circumstances agreed by the contracting parties (for example, at…show more content…
The decision in The Amphitrite was controversial, but the existence of the doctrine was not. Thus, citing The Amphitrite, Mason J. said: “in the absence of specific words, an undertaking which would affect the exercise of discretionary powers to be exercised for the public good, should not be imputed to the Commonwealth”. 10. Although the existence of the principle was not doubted, the reasoning of Rowlatt J. seemed to be that no contract existed at all because of the doctrine. The reasoning suggested an absence of capacity to contract. If so, The Amphitrite was wrongly decided . The circumstances in which the doctrine applied and consequences of its application have not proceeded on the basis of an absence of capacity in the Crown and its instrumentalities to contract. Rather, issues of damages for breach or compensation were pursued. 11. There is no doubt about the existence of the Doctrine in Australia and the United Kingdom. Its application was implicit and overriding, albeit within a narrow compass. A contract validly entered, could not bind a government or statutory corporation from exercising its statutory powers, absent some statutory prohibition, to the prejudice of the other party. Strictly, properly invoking the doctrine was not a breach of contract. Neither was it a frustrating event. It did not sound in damages contrary to the argument of Hogg. Invoking the doctrine to terminate a contract may be the subject of administrative review

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