Public Contracts Regulations 2015: Termination of contracts

Regulation 73(1) of the new Public Contracts Regulations 2015 requires contracting authorities to include in every public contract which they award, provisions allowing the authority to terminate the contract where any one of three grounds apply – in summary these are (a) material contract amendment which ought to have been subject to a new procurement, (b) Contractor ought to have been excluded from the process on a mandatory exclusion ground in regulation 57(1), and (c) serious infringement of Treaty/Directive obligations declared by the CJEU under infringement proceedings.

If a public contract doesn’t contain the provision described in regulation 73(1), regulation 73(3) will imply such a provision into the contract, allowing the contracting authority to terminate on giving reasonable notice. However, given that regulation 73(1) contains an express obligation on contracting authorities, and since it is preferable for authorities to be able to manage the process of such termination, it is advisable to include relevant drafting rather than have the provision be implied by law. The relevant clause ought to set out the process for such termination, and deal with any consequential matters arising from it.

This is the second in a series of articles on the Public Contracts Regulations 2015 prepared by members of Sharpe Pritchard’s procurement team, recognised leading providers of procurement advice nationally. Our clients include government departments, local authorities, housing associations and major private sector providers.

Posted in Commercial, Commercial contracts, Corporate Law.