An Introduction to Termination and Suspension under FIDIC Red Book

Termination and suspension are two of the most extreme rights granted by contracts.

The Red Book splits these out into three parts:

1. Clause 15, which deals with the Employer’s rights to terminate;
2. Clause 16, which considers the Contractor’s rights; and
3. Sub-Clause 18.5, which relates to termination due to Exceptional Events (this will be covered in a later course).

It should be remembered that there may also be other rights to terminate under local law, for example by accepting a repudiatory breach (a breach so serious that it goes to the very heart of the contract).

These are not considered in this course but should be borne in mind when considering any termination.

It is also critical that the rules governing termination are followed exactly.  A failure to issue notices correctly, or missing any deadline, could result not only in the termination being ineffective but also in leaving the party who tried to terminate in repudiatory breach itself.