Recently, the Court of Appeals of Maryland issued an opinion, which impacts
the use of "termination for convenience" clauses in construction contracts
between private parties. In Questar Builders, Inc. v. CB Flooring, LLC,
Maryland's highest court determined that termination for convenience clauses
may be enforceable between private parties but that such clauses are subject
to the "implied limitation that they be exercised in good faith and in
accordance with fair dealing." The upshot of the Questar Builders decision is
that termination for convenience clauses do not provide a right to terminate for
any reason whatsoever. Maryland courts will review whether the justification
for termination comports with the obligation of good faith and fair dealing,
which "requires a party exercising discretion to do so in accordance with the
'reasonable expectations' of the other party." Matthew Voccie of Ober|Kaler discusses the case.
Please see full publication below for more information.