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AEJAZ AHMED (Legal Consultant/Lawyer)     16 December 2009

Claim of Damages/Anticipated Profits - Contract Termination

Dear learned Friends,

In a Contract for Construction of Project Work Company has terminated the Contract as per the provisions and rights granted to them under the contract and, now  Contractor wants to Claim his anticipated Loss and damages.

There is one Clause for Termination of Contract at Company's Convenience and another clause for such termination, company shall not be liable for damages or loss of anticipated profits and Governing Law of the Contract is Law of England & Wales as below:

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 Termination at Company’s Convenience

The Company may at any time and at its sole convenience, terminate this Contract or any part of the Work by giving written notice to the Contractor specifying the extent and the effective date of the termination ("Termination Date").
Consequential Loss and Damages:

The Company, however, shall not be liable for any damage or loss of anticipated profits on the part of Contractor on account of such termination.

Governing Law:

This Contract shall be governed by, construed and determined in accordance with the laws and regulations of England and Wales.

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What is the validity of such type of Contracts...?

it is clearly mentioned by a separate clause about damages and claims,  as contractor is not having any right and Company is not liable on such termination. 

Even then,  can Contractor claim for Consequential loss and  damages or anticipated profits...?  


 4 Replies

R.R. KRISHNAA (Legal Manager)     16 December 2009

A clause which at the outset is unilateral or unfair can certainly be declared null and void.  I suggest you to file a case for damages and anticipated profits by seeking a declaratory preliminary prayer to declare the said clause as null and void since it is a unfair term of contract.  In fact I have come across many cases where the terms of the contract (such as above) have been challenged as null and void and prayer for damages have been sought and been granted by courts.  Hence It is your client's duty to convince the court of the unfairness and claim his relief.

R.R. KRISHNAA (Legal Manager)     16 December 2009

Moreover simply because jurisidciton of courts at england and wales has been incorporated in the contract and accepted to by the parties, does not confer jurisdiction in such courts.  It all depends on the cause of action and the other events to confer jurisdiction at a place.  If no part of cause of action has arisen in england and wales, then no case can be filed there.

DD Sathe (Contract Management)     17 December 2009

Normally in-direct and consequential losses will not be admissible and the clause in the contract is line and will hold good. Please clarify if there was any remedy specified on such termination in the contract? If not contractor will be entitled for reimbursement of reasonable expenses incurred for contract execution.

1 Like

Theja (Lawyer)     20 December 2009

I agree with DD Sathe. This provisions can not be called voide as does not fall under the provisions which define the agreements which are void under the contract laws. However, the terms and conditions of a contract which are aginst the basic principles of natural justice can be challenged.


In general, a party which is at better negotiating capacity can demand for a provision like this in his favor. And yes a termination without cause or for convenience provision without providing for any consequential damages/anticipated profits is very much enforceable. However, as DD Sathe has suggested, the contractior in that case can claim for reimbursement of reasonable expenses incurred for contract execution.

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