Contract Amendment and Termination

Table of Contents

Amending contracts

Contract amendments are used to change the original contract. The need for an amendment may be the result of more negotiations, changes in the original requirement, or the need to deal with something unforeseen. Amendments are subject to agreement by both parties to the contract.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.70.5 Amending Contracts.

Terminating contracts

If for any reason you must terminate a contract, always consult with your legal services before proceeding.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135 Terminations and the Standards Acquisition Clauses and Conditions Manual (SACC): Section 5J: Termination.

Termination for convenience

Sometimes you may have to cancel a contract for convenience. This could be because funds have been cut, or a government program has been cancelled, or other reasons which make the product or service unnecessary. A notice or letter of termination should be sent to the contractor.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135.5 Termination for Convenience of Canada.

Termination for default

Termination for default applies when the contractor breaches the contract, usually through non-performance or delayed delivery.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135.15 Termination for Default.

Termination by mutual consent

On rare occasions both the contractor and your client may agree to termination without claims or penalties, usually where your client has requested full or partial termination of a contract, the contractor has incurred minimal or no expenses and is willing to forego a claim, and the matter may be settled at no cost to the government.

Termination by mutual consent cannot be used when it is in the best interest of the government to declare a default termination; or when additional costs are claimed by the contractor following the reduction or cancellation of all or a portion of the contract.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135.20: Termination by Mutual Consent.

Request for termination by the contractor

A contractor may not be granted termination because of expected losses in performing the contract, but should be told instead that all contractual obligations must be fulfilled. The contractor may, on completion of the contract, request an "extra payment" for additional costs incurred or losses suffered, if some of the loss or additional cost is the fault of government.

If the contractor refuses to carry out the contractual obligations, termination for default should be instituted.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135.25 Request for Termination by the Contractor.

Financial security issues

If a contract is secured by a security deposit it should not be terminated without the prior advice of your legal services. If a contract is secured by surety bonds, it should not be terminated as this would also terminate the existing contractual relationship with the bonding company.

For more information, please see the PWGSC Supply Manual, Chapter 8: Section 8.135.30 Financial Security Issues Related to Terminations.

Resolution of contract disputes

Each government department has their own methods of resolving contract disputes. They should be consulted individually to obtain information on their conflict resolution procedures.

The purpose of PWGSC's Business Dispute Management Program is to assist with contract disputes where PWGSC is the contract authority.

For more information on PWGSC's resolution of contract disputes, please refer to the PWGSC Supply Manual, Chapter 8: Section 8.140 Disputes.

For more information

For more information, please see the PWGSC Supply Manual, Chapter 8: Contract Management.