Recovery When the Government Terminates for Convenience

The termination for convenience clause arose at the end of the Civil War so the government could terminate construction contracts made during wartime once peace ensued, and not be liable for the contractor’s loss of anticipated profits.  The War (now Defense) Department continued to use this clause throughout the 19th and 20th centuries.  The clause allowed the government to enter into a 10-year contract to buy arms without worrying about the conflict ending in three years and being liable for seven years of the contractor’s anticipated profits.