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Poof There it Is: Court Invokes the Constructive Termination for Convenience Doctrine for the Government

Client Alert | 1 min read | 11.18.20

In JKB Solutions and Servs., LLC, the Court of Federal Claims denied the contractor’s breach claim and held that the Government constructively terminated the contract for convenience. At issue was an Army contract to provide instructors for the Army’s Operation Contract Support program. The contract required JKB to perform 14 classes per task order, but the Army ordered fewer than 14 classes for all three task orders. In the motion to dismiss stage, the Court rejected the Army’s argument that the contract unambiguously required the Army to pay for only the services it ordered. The court instead found on the merits that the Army constructively terminated the contract for convenience and, therefore, did not breach it, even though the Army did not actually terminate the contract for convenience. In invoking the constructive termination for convenience doctrine on behalf of the Army, the Court found that (1) the Army did not act in bad faith by constructively terminating the contract because the Army never explicitly invoked the doctrine (the Court did) and (2) the Army could have invoked its right to terminate under the circumstances. The Court also ruled that since JKB did not submit a termination for convenience settlement proposal or ask for termination costs in its complaint, JKB was not entitled to recover any costs.

While this case appears to be an outlier in the longstanding termination for convenience jurisprudence, particularly those principles that preclude invocation of constructive termination for convenience in certain circumstances—e.g., after the performance period ends, or in order to circumvent an otherwise alleged breach—contractors should take caution in similar circumstances. When the Government breaches its ordering/payment obligations by reducing the scope of work, and depending on the extent of the reduction, contractors should promptly consider whether to request an equitable adjustment for a deductive change, or submit a termination for convenience settlement proposal to preserve the ability to recover termination settlement costs.

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Client Alert | 3 min read | 06.03.26

Important EU Court Judgment Clarifies Rules on Interest Due in Cartel Damages Cases

In a judgment that will have direct and immediate consequences, the Court of Justice of the European Union (CJEU) has clarified that for all competition damages actions brought after 26 December 2014, interest runs from the date on which the harm occurred. The ruling addressed two important questions: (1) whether national provisions implementing Article 3(2) of the EU Damages Directive — which requires interest to run from the date harm occurred —apply to cases in which the harm preceded the adoption of those provisions; and (2) how the date of harm should be determined in cartel cases involving the purchase of goods at inflated prices....