A termination for convenience ('TFC') clause in a
construction contract allows a principal to terminate a contract
with the contractor at its option, regardless of whether the
contractor has committed a default or breach of that contract. TFC
clauses essentially entitle a principal to terminate the contract
at any time and without cause for its own 'convenience'.
TFC clauses provide flexibility for principals to response to
contingencies in performing the contract, and reflect the evolving
need for principals' to respond to changes in current economic
conditions affecting construction projects.
The right of a principal to terminate for convenience is usually
qualified by an obligation to pay compensation for the cost of such
termination, namely payment for works completed, and in some
circumstances the direct and substantiated costs the contactor has
incurred as a result of termination.
