At the beginning of every construction project, the parties' preference is obviously to have the job completed on time and within budget, and for everyone working on the project to be paid in full. However, circumstances such as performance issues, delay, changes in the owner's financing or plans for the project, insolvency, market changes, and government intervention can arise that create an untenable situation and cause an owner to terminate the contract (and, in some cases, the project). Over time, and following principles in federal contracting, parties to public and private construction contracts have developed contractual provisions to address these circumstances and provide an off-ramp for the contractual relationship through a termination for cause (i.e., default) or convenience.

Under the common law, a party can terminate a construction contract if the other party materially breaches the contract. See Zulla Steel v. A&M Gregos, 174 N.J. Super. 124, 131-32 (App. Div. 1980) (holding that subcontractor could terminate for prolonged non-payment). Termination for cause provisions contractually define the specific circumstances in which a party may terminate for fault. See, e.g., American Institute of Architects ("AIA") A201^TM-2017 (General Conditions of the Contract for Construction), Art. 14.2.1; Titan Stone, Tile & Masonry v. Hunt Construction Group, 2010 U.S. App. LEXIS 19495, *37-39 (3d Cir. Sept. 20, 2010). Conversely, termination for convenience is not fault-based and provides an owner with broad discretion to terminate the contractual relationship at any time and for any reason, provided the termination is not made in bad faith. See, e.g., AIA A201^TM-2017, Art. 14.4.1, Interstate Indus. Corp. v. State, 2008 N.J. Super. Unpub. LEXIS 1495, *36-41 (App. Div. July 28, 2008).