Termination for convenience: what you're paid when the builder walks
Termination for convenience lets the builder end your subcontract for any reason on short notice. Most clauses pay only for work performed, with no profit on the balance and nothing clear for materials made but not installed. Negotiate committed costs, demobilisation and a fee on the unperformed balance.
Chapter 7: They can walk. You can't
When the book was written (Sept 2026), 57 of 63 subcontracts in the Australian Subcontract Index let the builder end the contract at any time, for any reason, on notice. Ten business days is common and some say five. You get no matching right: you're committed to the full price for the full job, and the builder is committed for a fortnight. It's rarely used, which is why most subbies shrug at it. The clause matters because of what it says about your money when it is used.
Picture a joinery subbie with $34,000 of finished units on a truck the morning the notice arrives. The developer has run out of money and every trade on the job is being terminated. The joinery was made for that building and can't be sold to anyone else. It isn't installed, so it isn't work performed, and it isn't on site either. The contracts administrator offers nothing, three months go on arguing over one word, and it settles for half.
Asking for the same right to walk is a fair opener, but most builders refuse it, so don't spend your leverage there. Spend it on what you're paid: work done, materials ordered or fabricated that can't be resold, demobilisation, and 5 per cent of the unperformed balance in place of the no-profit clause. The same part of the contract often hides take-out rights over your plant, so fix those too.
- 1When the book was written (Sept 2026), 57 of 63 Index subcontracts allowed the builder to terminate for convenience.
- 2Read your clause for four things: committed costs, demobilisation, anything for the balance, and a cap at the contract price.
- 3A 5 per cent fee on the unperformed balance of a $1.2 million package terminated halfway is $30,000, against an entitlement of nothing.
- 4Take-out clauses can let the builder use your plant without payment, even though most plant is financed or hired.
Find the termination for convenience clause in your current subcontract and read the list of what you're paid. If materials, demobilisation and the balance aren't on it, that's the next item for your departures schedule, and your exposure on every job until it is.
Common questions
Can a builder terminate a subcontract for convenience?
If the subcontract includes a termination for convenience clause, generally yes, on the notice it specifies, and most do. What matters is what you're paid when it's used. Check whether the clause covers materials ordered or fabricated, demobilisation and any amount for the unperformed work, and negotiate those before you sign.
Am I paid for materials if my subcontract is terminated?
Only if the clause says so. Many termination for convenience clauses pay for work performed and costs directly incurred in the termination, which can leave fabricated but uninstalled materials in dispute. Asking for payment for materials that can't reasonably be resold, on delivery to the builder, removes the argument. Get advice on your specific clause.
Free guides on this topic
A summary of chapter 7 of Screwed Down by Mat Kennedy. Index figures are as they stood when the book was written (Sept 2026); the live numbers are on the Index. Amazon ranking as seen in September 2026. General information, not legal advice.