Termination for convenience clauses are standard in public and private construction contracts and provide a means for one party to terminate a contract without breaching it. In the public sector, a government agency (whether federal, state, or local) typically may terminate a construction contract if the contracting officer determines that such action is in the "best interest" of the government. The termination process is set forth in the contract and is governed by applicable government regulations – such as the Federal Acquisition Regulations (FAR) for Federal Government contracts or the Code of Maryland Regulations (COMAR) for State of Maryland contracts.

In the private sector, the termination process is also set forth in the contract (often in a clause like section 14.4 of the AIA A201-2007) but is governed by principles of contract law, which do not provide the terminating party with the "near carte blanche power to terminate" that government agencies have. Thus, while private parties do have freedom to contract, the freedom is not limitless. Instead, private parties must be mindful of contract law principles that can control whether a termination for convenience clause in a particular construction contract is enforceable and whether the actions taken by the terminating party pursuant to that clause are valid.

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