Termination of Contract for Services

A contract for services usually reaches a positive conclusion when the contractor delivers the result free of defects and the client pays the remuneration agreed for it.

However, this positive scenario cannot be realised if, for example, the parties were previously disputing the quality required of the product or the circumstances in which the service was to be rendered, resulting in the termination of the contract.

There are different ways to settle the contract depending on the grounds on which the contract was terminated. When it comes to termination effected by the client, the ‘Construction Contract Procedures’ (VOB) distinguish between four key scenarios, of which there are two met particularly frequently: termination of the client’s own volition and termination for good cause.

If the client makes use of its right under Section 8(1), Part B VOB to terminate the construction contract for its own reasons, the contractor is entitled to full remuneration for the agreed performance less the costs not yet incurred.

On the other hand, if the client terminates the contract for good cause, i.e. for reasons defined in Section 8(3), Part B VOB, the contractor receives only the remuneration for the work already performed and, in addition, must accept charges for the additional expenses incurred by the client for the terminated work. Furthermore, the client can enforce an associated claim for compensation.

We can assist you with the assessment and investigation of claims arising from terminated contracts for services.