Termination for cause is costly and adversarial and has been covered in this article. But can a terminating party use equipment and tools left behind on the worksite (i.e., a crane)? The answer depends on what is in your contract.
Under ConsensusDocs, a constructor must give its permission to use any equipment or supplies left at the worksite, such as a crane.[i] Moreover, the owner must indemnify the constructor for using their equipment. This makes sense because even if a constructor were appropriately terminated for cause, using their equipment and materials they no longer possess or control unfairly creates additional liability exposure. At a minimum, the owner should take on the risk of using the equipment and materials since they benefit from such use.
In contrast, the American Institute of Architects (AIA) A201 General Conditions Document gives an owner unfettered permission to use tools and equipment left at the worksite upon termination. The AIA A201 14.2.2.1 provides that once termination for cause is invoked and notice is given, the owner may “Exclude the Contractor from the site and take possession of all materials, equipment, tools, and construction machinery thereon owned by the Contractor.”
ConsensusDocs and AIA take drastically different approaches to this issue. Under AIA, an owner is given a blank check to use equipment left at the worksite by a terminated contractor. If the owner’s termination for cause is later deemed wrongful, using such equipment and materials would likely lead to a claim for additional costs. This is another reason why termination for cause, while rare, gives rise to expensive claims.
Comments or questions about this article may be directed to Brian Perlberg, Executive Director and Senior Counsel, ConsensusDocs Coalition, at bperlberg@ConsensusDocs.org.
Additional Resources
ConsensusDocs Guidebook here.