As has been detailed previously on this blog, construction contracts cannot be terminated unilaterally unless they contain some sort of termination for convenience clause. Many of the clients that we here at the Triangle Law Group have worked with in the past often feel handcuffed by such clauses. To avoid the same predicament, you may think that all you need to do is ensure your contracts do not contain them. However, a majority of public agencies in Raleigh insist upon them, and the law often provides the government with latitude when choosing to exercise them.
You may not be left completely holding the bag should a government partner choose to terminate your contract. You are typically entitled to collect on the value of work you have already done as well as the expense that comes from closing out the contract. You may, however, be able to collect damages for breach of contract even if yours contained a termination for convenience clause. You simply need to prove that your government partner negotiated and operated in bad faith.
Proving bad faith on the part of government contractors can be difficult. According to the American Bar Association, it is presumed that such parties are only motivated by the obligation to discharge their duties, unless evidence suggests otherwise. Your suspicions do not count as evidence. You must be able to prove (through specific examples indicating ill will) that your partner acted with malicious intent or animus towards you. If not that, then you need to present evidence that showed that the agency never intended to honor its contract with you. This evidence must support a claim of knowing and intentional conduct on the part of your contracting partner.
More information on disputing unwarranted contract terminations can be found here on our site.