Is Determination of Employment and Termination of Contract the same in meaning and implications

One of the common problems in the construction industry which usually has serious implications on the project and the parties concerned is termination of contract or determination of employment by the Employer or Contractor. The action of determination or termination almost always brings the contracting parties into arbitration or litigation. However, although the implications are serious for the parties concerned to arrive at such a precarious state, many players in the construction industry still lack the understanding and appreciation of the difference between determination of employment and termination of contract. Often the term has been construed, mistakenly, as being the same in meaning and implications when in fact they are somewhat different and can be well distinguished.

Further, it is often said that a contract has been determined or the Contractor’s employment has been terminated, which in the strictest sense and interpretation, is wrong. It means that although the employment of the contractor has ended, the contract nevertheless still subsists but the rights and obligations of the parties are governed by the post determination provisions as set out in the contract.

This article serves to clarify and act as a guideline for Employers and Contractors including Sub-contractors to exercise their rights contractually and/or at common law, carefully and with caution when a contracting party chooses to embark on such drastic recourse or remedy for breach committed by the other party in the contract.

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