Terminating a Building Contract : Here’s How You Can Do It

January 3, 2023    propertylawyersperthwide
Terminating a Building Contract : Here’s How You Can Do It

It can be very frustrating when things are not going as planned during a construction project. Deviations from plan variations and delivery schedules during the build can often lead to delays and blown-out budgets. But there are limited circumstances where you will have specific rights to terminate the building contract.


Before you hire a building contract solicitor, you must know that you can only have these rights under the law and various clauses under the contract itself. Read the blog below to learn about the different ways to get out of your building contract.

What is a Termination?

Termination of any kind of contract is the process of either ending or cancelling that contract before the parties have fully performed all their obligations. After a contract has been eliminated, all the rest of the performance obligations created by the contract do not exist.

What Are the Legal Aspects for Terminating a Building Contract?

Under Australian law, there are three grounds that give rise to termination:

1. Termination by Agreement

You will be able to terminate the contract when you and the 2nd party agree to them. This can either be an express agreement or even an implied agreement, although it is recommended to do it in writing. Any implied termination agreement must be cleared via the party’s conduct. The conduct needs to indicate that neither party needs the other to perform their obligations under that contract.

2. Termination for a breach of contract

If you are looking for a contract termination as the other party has breached it, you must properly identify the clause that has been breached. After this, you must decide if the clause is an important term or a non-important term. The essential terms are usually the fundamental terms of the contract, and non-essential terms are described as a warranty. They are also known as the intermediate term.


If the other party has breached an important term of the contract provided by a house demolition contractor, you will be allowed to terminate the contract. The main terms in building and construction contracts usually relate to payment and time stipulations.


But a sufficiently serious or substantial breach of any non-essential term can also provide you with the right to terminate. Commonly, a proper serious breach is one that:

  • Goes to the main root of the contract
  • Is a type of obligation of basic importance
  • Substantially deprives you of the benefit or advantage of the contract.

3. Termination for repudiation of the contract

Before you opt, you must know the reasons to hire a property contract lawyer or you must know that the act of repudiation will happen when one party shows an intention that they are either unwilling or not able to perform their obligations under the contract. The demonstration can be either of the following:

  • Express: The party informs you that you will be unable to perform their obligations under the contract.
  • Implied: The party’s actions will make it clear that they will not be performing their contractual obligations. They can easily sell off the assets that they need if they were to perform the contract.

Termination will only happen if the repudiation refers to either a serious or basic contractual obligation. You must also accept that repudiation and show that you were ready and looking to perform the contract if not for the other party.


If you are looking to terminate or end a contract for either repudiation or breach, you may even be able to claim compensation. This is especially if you suffered any kind of financial loss due to the non-completion of the contract. You can also opt to ask for any kind of legal advice before pursuing any of these pathways.

Contractual Right of Termination

Before you are able to know more about the types of building contract agreements, you must know that in some situations, a building and construction contract can also allow for automatic termination. Other than that, a contract can also generate a right to terminate based on certain events or defaults.

Automatic Termination

Building contracts similar to any other type of contract can have clauses that allow for automatic termination when any certain event occurs. Automatic termination clauses are more commonly formed due to a pre-condition along with a time stipulation.

Specific events that create a right to terminate the contract

In case of the termination of a building work contract, most contracts contain a list of particular events that give rise to such kinds of termination. Some common examples of building and construction contracts are as follows:

  • Failure to acquire government or municipal approval by a certain given date.
  • The failure to acquire necessary finance by a certain date.
  • Acts of insolvency, for example, where a party turns bankrupt. Here, if you get a right of termination, you need to provide the other party with any formal written notice that can outline your intention to terminate.

Termination After Default

Before you look to terminate a home construction contract, you must know that construction and building contracts will have a termination clause that sets out particular breaches of contract. This will include a rise to the right of termination. These are the breaches that are sometimes thought of as an event of default. However, only the basic and sufficiently serious breaches can give rise to the right to terminate or end the contract.


Some common examples in buildings and construction contracts also include the failure to:

  • To make payment on time.
  • Complete building works.
  • Supplying important quality materials.
  • To supply materials by a given date.

Termination of any contract after default is not considered automatic, and when there has been an event of default, the Australian building contract includes a ‘notice clause’. You must provide a formal written notice to the other defaulting party that can provide detail of the breach.


After this, the defaulting party will be provided with the opportunity to rectify the breach within a given timeframe. If the defaulting party does not rectify the breach, you must provide another written notice that can confirm that you have terminated the contract.

Contact Property Lawyers Perth

If you want to hire building contract lawyers, search for ‘property lawyers near me‘ and select a lawyer of your choice. Contact Property lawyers Perth to access the best contract lawyers in the area who can help you claim in case of a contract or manufacturing processes. The best things about these lawyers are that they can handle any matter professionally or efficiently.

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