How does A201 address termination for convenience and termination for cause?

• A. It allows termination only for convenience by the Owner.
• B. It creates a unilateral right to terminate by the Contractor only.
• C. It sets out the circumstances and procedures for termination by a party for cause and by the Owner for convenience, including procedures and compensation.
• D. It prohibits termination except for nonperformance.

Answer: (C)

AIA A201 handles two termination scenarios with clarity: termination for cause and termination for convenience by the Owner. For termination for cause, the contract lays out when a party has defaulted and what steps follow—typically a written notice of the default, an opportunity to cure within a set period, and, if the default isn’t cured, the right to terminate the contract. After termination for cause, the aim is to wind things down in an orderly way, with payment to the non-baulting party for work already performed and for closeout or demobilization costs, so they’re compensated for the value actually completed and the costs to finish or settle open items.

Termination for convenience by the Owner lets the Owner end the agreement without cause, again with notice, and the Contractor is paid for work already performed and for reasonable closeout and demobilization costs, plus a reasonable profit on the value of the work completed. This framework ensures there are defined procedures and financial consequences for both grounds of termination, rather than leaving termination to unilateral whim or vague terms.