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ARTICLE · 22 JANUARY 2020

The consequences of incorrectly terminating a contract

The right to terminate is integral to a contract, but there can be costly consequences if a party gets this wrong.

AustraliaCorporate/Commercial Law

Local Governments, as part of their day to day functions, find themselves party to contracts in a wide variety of circumstances. Procurement of goods or services is often considered the main arena of local government contracts. However, many other divisions of local government also contract on a regular basis including for property and asset management, engineering and governance.

Whilst contracts are designed to govern what the parties are required to do and when they are required to do it a contract should also provide for what happens if things do not go according to plan or if one party fails to do what they are contracted to do either wholly or in part.

The right to terminate is integral to a contract, but there can be costly consequences if a party gets this wrong.

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