When Can a Missouri Construction Contract Be Terminated?
Mar 4 2025 On Behalf of David M. Duree & Associates, P.C. Construction Law
Under certain circumstances, one or more parties to a construction contract in Missouri may wish to terminate the agreement before the completion of the construction project. A construction law attorney can help you determine your rights regarding terminating your contract.
Legal Grounds for Terminating Construction Contracts
Parties can lawfully terminate construction contracts in Missouri under various circumstances, such as:
- Mutual agreement: Parties to a construction contract can mutually agree to end their contractual relationship.
- Breach of contract: A non-breaching party can immediately terminate a contract upon the other party’s material breach of the agreement.
- Non-payment: Contractors can stop work on a construction project and terminate the contract if a client fails to make the required payments.
- Failure to perform work: Clients may terminate construction contracts when contractors do not work on the project or perform substandard work that requires repairs or revision.
- Material misrepresentations or fraud: Parties may seek to terminate a construction contract due to the other party’s misrepresentation or fraudulent representations. For example, a client may terminate a contract after discovering that the contractor misrepresented their experience, skill, or ability to complete the project.
Termination Clauses in Construction Contracts
Construction contracts can also include termination clauses that govern when parties may terminate the agreement and the parties’ obligations when someone invokes the termination clause. Common examples of termination clauses in construction agreements include:
- Termination for convenience: A construction contract may give the customer/client the right to terminate a contractor at will with no financial obligation other than to pay for work and materials the contractor has already provided. However, terminations for convenience may require a client to provide advance notice of termination (e.g., seven days, 14 days, or 30 days).
- Breach of contract: Termination clauses can include provisions governing how parties may end the contract due to a breach. In many cases, the non-breaching party must notify the other party of the breach and their intent to terminate the contract and allow the breaching party to remedy the breach.
- Failure to diligently progress work: Construction contracts can also give clients the right to terminate the agreement due to a contractor’s failure to make diligent progress or for shoddy, substandard work. However, termination clauses may require clients to provide contractors with notice and opportunity to cure delays or deficient work unless the contract contains a “time is of the essence” clause that makes delays or missed deadlines a material breach.
Legal Processes for Termination
A party who wishes to terminate their construction contract may have a specific process they must follow. The contract may impose notice requirements or other formal procedures for a party to invoke their right to terminate. A terminating party should also thoroughly document the reasons for the termination (such as poor performance or non-payment), outstanding work or invoices, and communications between the parties during the termination process.
Potential Consequences of Contract Termination
Terminating a construction contract can have various consequences for the party seeking to end the contract. For example, the other party may argue that the terminating party lacked a legal or contractual right to terminate the agreement; the other party may file legal action to recover compensation for that improper termination. Terminating a contract can have financial consequences for the terminating party, as the contract may impose financial obligations or penalties for some terminations.
Finally, terminating a construction in the middle of a project can also negatively affect the terminating party’s reputation. A contractor who leaves a project may find future clients unwilling to work with them due to fears the contractor will also leave their projects unfinished. Clients who terminate contracts may develop a reputation among contractors as challenging to work with.
Steps to Take Before Terminating a Construction Contract
Parties wishing to terminate their construction contract should follow specific steps to protect their legal options and interests, including:
- Attempting to negotiate a resolution of a project dispute before invoking a termination clause
- Gathering all documentation of the project
- Pursuing alternative dispute resolution procedures as required by the contract, such as mediation or construction arbitration
- Reviewing the requirements for termination, such as advance notice or allowing the other party to cure deficient performance
Finally, a party wanting to end a construction contract should consult a knowledgeable construction lawyer. A lawyer can help the party understand their termination rights and guide them through properly terminating the agreement.
Contact a Construction Law Attorney Today
If you wish to end your construction contract or believe your counterparty has improperly terminated your contract, get experienced legal guidance to understand your rights and options. Contact David M. Duree & Associates, P.C. today for an initial consultation with our legal team to discuss the legal requirements for terminating a construction contract in Missouri.