5.33.940 Contract Cancellation, Contractor Termination Procedures.

City Code Section

(Amended by Ordinance 185898, effective February 20, 2013.)

  1. A.  Grounds for Cancellation or Termination. The City may, at its option, cancel a Contract or terminate the Contractor’s performance, if cancellation or termination is in the best interest of the City; or, for any material violation of the provisions of the Contract. Such provisions generally include, but are not limited to:
    1. 1.  Standard terms and conditions included in Contracts;
    2. 2.   Product or service Specifications;
    3. 3.  Delivery or completion requirements; or
    4. 4.  Contracted pricing and price escalation/de-escalation clauses.
  2. B.  The City and the Contractor may cancel the Contract at any time by mutual Written agreement.
  3. C.  Termination For Convenience.
    1. 1.  Reasons for Termination. The City may, in its sole discretion, by a Written order or upon Written request from the Contractor, cancel the Contract or a portion thereof if any of the following occur:
      1. a.  The Contractor is prevented from completing the Work for reasons beyond the control of the City; or
      2. b.  The Contractor is prevented from completing the Work for reasons beyond the control of the Contractor; or
      3. c.  For any reason considered by the City to be in the public interest, other than a labor dispute or any third party judicial proceeding relating to the Work filed in regards to a labor dispute. These reasons may include, but are not limited to, non-availability of materials, phenomena of nature of catastrophic proportions or intensity, executive orders of the President related to national defense, congressional,  state or local acts related to funding; or
      4. d.  Any third party judicial proceeding relating to the Work other than a suit or action filed in regards to a labor dispute; or
      5. e.  If the circumstances or conditions are such that it is impracticable within a reasonable time to proceed with a substantial portion of a Public Improvement. 
  4. D.  Payment When Contract is Canceled.  When the Contract, or any portion thereof, is canceled before completion of all items of Work in the Contract, payment shall be made, based on the Contract price, for the actual items of Work completed under the Contract, or by mutual agreement, for items of Work partially completed. No claim for loss of anticipated profits or overhead shall be allowed;
  5. E.  Responsibility for Completed Work if Contract Canceled.  Cancellation of a Contract or a portion thereof shall not relieve the Contractor of responsibility for the Work completed, nor shall it relieve the surety of its obligation for any just claims arising from the Work performed.
  6. F.  Termination of The Contractor’s Performance for Default.
    1. 1.  Declaration of Default. The City may, after giving the Contractor and its surety seven (7) Days Written notice and an opportunity to cure deficient performance, terminate the Contractor’s performance for any reasonable cause.  Upon such termination, the City may immediately take possession of the premises and of all materials, tools and appliances thereon as well as all other materials, whether on the premises or not, on which the Contractor has received partial payment. The City may finish the Work by whatever method it may deem expedient;
      1. a.  If the Contractor should repeatedly refuse or fail to supply an adequate number of skilled workers or proper materials to carry on the Work as required by the Contract documents, or otherwise fail to pursue the Work in a timely manner; or
      2. b.  If the Contractor should repeatedly fail to make prompt payment to Subcontractors or for material or labor; or
      3. c.  If the Contractor should voluntarily or involuntarily seek protection under the United States Bankruptcy Code and its Debtor in Possession or Trustee for the estate fails to assume the Contract within a reasonable time, or as provided by the Bankruptcy Court; or
      4. d.  If the Contractor should make a general assignment for the benefit of the Contractor’s creditors; or
      5. e.  If a receiver should be appointed on account of the Contractor’s insolvency; or
      6. f.  If the Contractor is otherwise in material breach of any part of the Contract; or
      7. g.  If the Contractor should disregard laws, rules, or the instructions of the City or its Authorized Representative. 
    2. 2.  Required Response to Declaration of Default. If a default is declared and the Contractor’s performance terminated, the Contractor or the surety shall provide the City with immediate and peaceful possession of all of the materials, tools and appliances located on the premises, as well as all other materials whether on the premises or not, on which the Contractor has received any progress payment. Further, the Contractor shall not be entitled to receive any further payment until the Work is completed. On the completion of the Work, the City shall determine the total amount of compensation the Contractor would have been entitled to receive for the Work, under the terms of the Contract, had the Contractor completed the Work. If the difference between this total amount and the sum of all amounts previously paid to the Contractor, (the unpaid balance) exceeds the expense incurred by the City in completing the Work, including expense for additional managerial and administrative services, such excess will be paid to the Contractor, with the consent of the surety;
    3. 3.  Expense of Completion. The expense incurred by the City shall be as determined and certified by the City;
  7. G.  Refusal to Perform. In addition to and apart from the above-mentioned right of the City to terminate the Contractor’s performance, the Contract may be canceled by the City for any willful failure or refusal on the part of the Contractor and its surety to perform faithfully the Contract according to all of its terms and conditions; however, in such event neither the Contractor nor the surety shall be relieved from damages or losses suffered by the City on account of the Contractor’ breach of Contract;
  8. H.  Remedies Cumulative. The City may, at its discretion, avail itself of any or all of the above rights or remedies and invoke anyone of the above rights or remedies without prejudice and without precluding the City from subsequently invoking any other right or remedy set forth above, or in the Contract, or available at law or in equity.
  9. I.  Notice. The City shall provide the Contractor Written notice of the grounds for Contract cancellation or Contractor termination and of its intention to cancel the Contract or terminate the Contractor’s performance. If the Contractor provided a performance and payment bond, the surety shall also be provided with a copy of the notice of Contract cancellation or Contractor termination. The notice shall include:
    1. 1.  The effective date of the intended cancellation or termination,
    2. 2.  The grounds for cancellation or termination, and
    3. 3.  Notice of the amount of time (if any) in which the City shall permit the Contractor to correct the failure to perform.
  10. J.  The Contract documents may provide Contract cancellation or Contractor termination procedures that are different from, or in addition to, those provided herein. If a Contract contains a cancellation or termination clause, that clause rather than Section 5.33.940 shall determine the respective rights and responsibilities of the parties in the event of cancellation or termination.
  11. K.  Contract Completion By Substitute Contractor. If the Contractor has provided a performance and payment bond, the City may afford the Contractor’s surety the opportunity, upon the surety’s receipt of a cancellation or termination notice, to provide a substitute Contractor to complete performance of the Contract.  The substitute Contractor may Contract with the surety or the City may Contract with the substitute Contractor selected by the surety.  Performance by the substitute Contractor shall be rendered pursuant to all material provisions of the original Contract, including the provisions of the performance and payment bond. Substitute performance does not constitute the Award of a new Contract and shall not be subject to the provisions of ORS Chapter 279A, 279B or 279C.