Recently, we have been involved in the termination of several high-profile construction contracts. The purpose of this update is to provide a refresher of the key characteristics of termination and to explore the likely consequences of such an event.
In construction contracts, it is commonplace to refer to the right that flows from breaching a condition, repudiating a contract or fundamentally breaching the contract as a right to terminate. However, there are important differences in the consequences that arise from rescission and termination. For example, rescission treats the contract as if it had never existed, whilst termination discharges the parties from any future obligations.
Where a contract is terminated for breach, repudiation or frustration, the contract is discharged either as a whole or partially terminated.