A week before you are to begin a new project as a subcontractor,
the general contractor tells you your services no longer are
needed; the general contractor has decided to go in another
direction. The general contractor follows up with a letter
directing you to cancel any existing orders for materials and
return to your suppliers any materials you already have obtained.
If you have received materials that cannot be returned, you are to
furnish those materials and submit documentation of the amount you
paid for them and you will be reimbursed for your costs.
Can the general contractor legally do this? And what, if
anything, are you entitled to recover?
As is so often the case with legal issues pertaining to
construction projects, the answer depends on what the contract
states. More specifically, the answer depends on whether the
contract contains a termination for convenience clause and exactly
what the clause says.
If there is a provision allowing the general contractor to
terminate the contract for convenience and pay you only for the
value of the work performed on the job at the time the notice of
termination is given, you might not be entitled to recover anything
if you cannot show any work...
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