AIA 201 Document: Termination

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September 22, 2015

Article 14 of A201 addresses termination and suspension of the Contract. Article 14 allows for termination by both the Contractor and the Owner, but on differing bases. This is yet  another area where there may be some overlap with Nevada law, and a Contractor’s right to stop work and terminate the contract under the prompt pay provisions of NRS Chapter 624.

A201, §14.1 sets out the conditions for termination by the Contractor. The Contractor may terminate if the work has been stopped for 30 consecutive days because of: a government order or emergency; the failure to issue a Certificate of Payment or the failure to make payment; or the Owner fails to provide reasonable evidence of the ability to pay for the Work.22 In order to terminate the contract, the Contractor must provide seven days written notice before terminating the contract.23 If the Contractor terminates the contract in accordance with Article 13.1, the Contractor is entitled to recover payment for the Work performed, including a reasonable overhead and profit, and costs for the termination.24

Like the Contractor, the Owner may terminate the contract for cause.25 Cause includes the Contractor’s failure to supply enough workers or materials; failure to make payments to subcontractors; the Contractor’s disregard for laws or codes; or if the Contractor is in “substantial breach” of the contract.26 The Owner must provide at least seven days written notice
before terminating the contract.27 Upon termination for cause, the Owner is not required to make any further payments to the Contractor until the project is complete.28 After the work is completed, if the amount spent by the Owner is less than the contract amount, the Owner must still pay the remaining amounts to the Contractor.29 If the amount spent exceeds the contract amount, the Owner is entitled to recover that amount from the Contractor.30

In addition to cause, the Owner may terminate for its own convenience.31 The Owner
must pay for the work performed to the termination, and a reasonable profit and overhead for the
work not completed.32

 

18 A201, §9.10.1.
19 Id.
20 A201, §9.10.4 and §9.10.5.
21 A201, §9.10.4.
22 A201, §14.1.1.1 - §14.1.1.4.
23 A201, §14.1.3.
24 Id.
25 A201, §14.2.1.
26 Id.
27 A201, §14.2.2.
28 A201, §14.2.3.

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