Termination by Owner for Cause results in what outcome?

Termination by Owner for Cause results in what outcome?

• A. All work ceases and Contractor is not paid
• B. Partial payment
• C. Contractor continues with modified terms
• D. Work continues with penalties

Answer: (A)

Termination for cause means the contract ends due to the contractor’s default, so the work must stop immediately. Because the owner is terminating because of nonperformance, there isn’t an obligation to continue paying for the remaining, unfinished work. The owner can withhold payments for the unfinished portion and may seek damages or hire another party to complete the project. In short, ongoing work stops and no further payments are due for the unfinished scope, which is why this outcome is described as all work ceases and the contractor is not paid.

Termination for cause means the contract ends due to the contractor’s default, so the work must stop immediately. Because the owner is terminating because of nonperformance, there isn’t an obligation to continue paying for the remaining, unfinished work. The owner can withhold payments for the unfinished portion and may seek damages or hire another party to complete the project. In short, ongoing work stops and no further payments are due for the unfinished scope, which is why this outcome is described as all work ceases and the contractor is not paid.