Avoiding Termination - Is It Possible?

Sometimes a long-term contract cannot be terminated, even where there are good reasons for doing so. This is because termination may not offer the best value for money.

So, if you cannot afford termination, what else can you do to better your position?

You can:

• Seek to negotiate a reduction in the scope of the works or services;
• Exercise contractual rights more stringently, e.g., levying deductions to encourage better service delivery;
• Refinance the project (with lower interest rates); and/or
• Put in place stronger performance monitoring and enforce mechanisms to incentivise improved performance.

Another option available is "Lender step-in-right or novation"

The Lenders' step-in rights may be either permanent (novation) or temporary (step-in/out).