A Closer Look at Contractor Termination Clauses

Posted By: Team Moody,

Construction is a huge industry that is critical for the incredible growth occurring in cities across the nation. Unfortunately, the larger an industry grows, the more susceptible it is to widespread problems. The number of searches online about suing a contractor is rising, so it is of increasing concern that contractors protect themselves from unnecessary risk, especially regarding contractor lawsuits. The best way to start is by knowing what you need protection from, so contractors should be aware of the questions their clients may be asking and how they relate to termination clauses.

When Can You Sue a Contractor?

As you may well know, termination clauses dictate the circumstances under which a party can terminate a contract. If a contractor does not fulfill the terms set forth in the contract, that doesn’t automatically mean the other party can or will terminate the contract. Typically, the other party will give the contractor a chance to rectify the situation and complete the missing or faulty aspects of a project prior to the termination of the contract. However, repeated mistakes or neglected responsibilities can result in the termination of the contract as the termination clause allows. There may also be a lawsuit against the contractor for faulty work or breach of contract.

Can You Sue a Contractor Without a Contract?

You may think that an oral agreement void of termination clauses and other formal aspects has no legal weight and no ramifications for a bad contractor. However, you would be wrong to believe that. Either party in a verbal arrangement must still keep up their end of the bargain or face consequences, including the possibility of a lawsuit. However, the lawsuit would be more complicated without hard proof of the terms of an agreement. In this case, the absence of termination clauses leaves termination to the discretion of the client, though it also leaves room for the contractor to sue for wrongful termination.

How Do I File a Lawsuit Against a Contractor?

For a contractor, this is the most dreaded of the possible internet searches by clients. Luckily, alongside high-quality contract insurance coverages, termination clauses can protect contractors from unreasonable lawsuits by disgruntled clients. With specific terms laid out under which the client my rightfully terminate the contract, both the client and the contractor know exactly how to avoid any actions that may result in a lawsuit. Oftentimes, when clients seek legal advice with the intention of suing a contractor, attorneys advise against lawsuits except in extreme cases. Termination clauses also limit the reasons a client may rightfully sue the contractor, which increases the contractor’s protection.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.