Is Owner’s Right to Terminate For Convenience Absolute?

Termination-for-convenience (T-for-C) clauses originated as a means of giving the government authority to swiftly cancel military procurements in the event of a sudden end to the war. The substance of these clauses has not changed significantly over the past 150 years. The owner has broad authority to terminate without cause, and its obligation is to pay the terminated contractor its costs incurred so far, along with nominal demobilization costs and a reasonable profit only on the work actually performed. However, allowing this clause to be used by the owner as to find a better commercial deal is bad policy; and many courts and juries would deem this conduct unacceptable.