Abandonment of Contract
Abandonment of a construction contract can be the result of action (or inaction) by either or both parties to the contract. If both parties abandon the contract, neither may complain that the other breached the contract. On the other hand, if only one party abandons, the other party may have a strong case for breach of contract. Of particular import, public contracts cannot be abandoned; abandonment is only an option for private contracts.
Mutual abandonment does not have to occur as a result of an open and formal agreement between the parties. It can also be shown by evidence that one party took actions completely inconsistent with operation of the contract and that the other party acquiesced in such inconsistent actions.
The abandonment of a contract by one party can occur as a result of the breach by the other party. For example, it has been held that if an owner fails to make payments due and owing to the contractor for the construction work being performed, the contractor would be justified in abandoning the contract. Essentially, the actions of the owner precipitated the contractor’s abandonment. Another example where one party has “abandoned” the contract arises in the context of change orders. If the owner submits such a multitude of change orders that the scope of work is completely changed, the owner can be considered to have abandoned the original contract. On the part of the contractor, “abandonment” can occur when he, without justification, discontinues work on the project before reaching the point of “substantial completion.”