Consider this hypothetical scenario. An owner-developer commences construction of a 30-story hi-rise residential building toward the end of the real estate boom. As the core and shell of the building is close to completion, the owner realizes that the boom is over and it will be unable to sell the apartments at a profit for a least two to three years. When the building is fully enclosed, protected from the elements and approximately 60 percent complete, the owner terminates the contract “for convenience.” The contractor is paid for all work performed to date, demobilization costs, subcontractor close-out costs, and 60 percent of its profit. Three years later, the owner-developer is ready to recommence construction and discovers that a substantial number of structural steel reinforcing members required to be imbedded in the building’s columns have been omitted.
This article will examine the very limited question of whether an owner can recover from the contractor the cost of remedying the defective work discovered after a “termination for convenience.”
The Common-Law Doctrine
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