Understanding Construction Contract Termination

Construction contracts form an important part of the DNA of heritage preservation projects because they set out the terms on which the work must be performed, usually by detailing the job requirements, vendor expectations, project deadlines and completion dates. In addition, construction contracts often expressly describe how the contract may be legally terminated, which is not always the same thing as terminating the contract for default. Sometimes, contracts go unused altogether and have to be replaced in order to be enforced or applied, such as when a contract cannot be properly cancelled with a 30-day notice. Depending on how the legal termination of the contract occurs, the consequences can affect both the contractor and the building owners. But how does legal contract termination relate to cultural and natural heritage conservation?

To ask this question is to open a Pandora’s box because there are a wide range of conflicts that arise between contracting firms and heritage conservation goals. For example, suppose a firm’s machinery inadvertently causes structural damage to a Bridge Street heritage site following its demolition; even though the site was protected by a conservation covenant, the firm and the owner may be liable for damages to the statutory authorities tasked with protecting the heritage site. In another case, suppose a contract sets a completion date that the firm properly met according to the contract terms, but a client and the relevant heritage conservation department disagree over the quality of how the project was completed; the result is that it may be difficult to determine which party failed to comply with the contract, meaning no party can terminate the contract, and the two parties will have to renegotiate their positions, whether in writing or orally. Lastly, suppose that an organization contracted to provide professional heritage conservation services subsequently went bankrupt and could not complete the services; in such a scenario, if the organization has agreed to give its services for a fee, the contract may be legally void and the organization may be protected from any compensation.

These scenarios illustrate three different methods of legally terminating a contract and the way that contract termination can impact heritage sites and the organizations contracted to conserve them. The first method, called the „resignation method” has been described by the Centre for Heritage as a „no fault approach”. In reality, however, resignation can lead to breach of contract and damage liability when it occurs before then end of the contractual performance period. Even if the contract was validly terminated, the building owner and/or the contractor may still be liable to the public for damages caused by the breach, especially if the contract was necessary for the preservation of tangible heritage. In the second scenario described above, the contract itself may allow one or both parties to assign their rights and obligations to a third-party; this means that the contract itself may have to be terminated in order for a new agreement to be drafted. Even if there is no dispute over the terms of the contract, the original agreement may no longer apply even if the completed work has already been accepted by the parties. In such a situation, both parties may have to renegotiate an entirely new contract.

Fortunately, the educational qualifications and academic discourse maintained by organizations like The Heritage Educational Portal help to keep the conflict that arises in the interstice between contracts and heritage sites in check, which is valuable to conservators in the field. For example, a recent article titled Ways To Legally End A Construction Contract explained that contracts may be terminated: (1) by mutual agreement, (2) for default of either party, or (3) for frustration. Education resources like these can be relevant to students and researchers in many disciplines related to heritage preservation.