Giving government some flexibility: making your Termination for Convenience clause work

Key Points:

While Termination for Convenience clauses give flexibility rights, they need to be clearly drafted, exercised in good faith, and complied with.

While a contract sets out the ongoing rights and obligations of a party, many contracts provide for termination for convenience in whole or in part as a flexibility right. From a customer's perspective, the clause should provide the customer with an absolute unfettered discretion to terminate the contract for any reason whatsoever. This right is usually subject to an obligation to pay for work done up to the time of termination as well as compensation to the contractor.

Termination for Convenience (TFC) clauses are commonly used in government contracts; construction contracts and some private commercial contracts.