Termination for cause is the contractual right to end a contract when the other party has committed a material breach. Standard construction contracts list specific grounds: persistent failure to supply enough labor or materials, failure to pay subs, persistent disregard of laws, persistent failure to perform per the contract, and similar. The procedure typically requires: written notice citing the specific default, a cure period (often 7 to 14 days), the other party's failure to cure, and then formal termination notice.
Termination for cause is high-risk for both sides. If the terminating party gets the breach analysis wrong (or skips a procedural requirement), the termination becomes a wrongful termination, which is itself a breach exposing the terminating party to large damages. Owners terminating contractors face: completion costs, schedule delay, defending the basis for cause if challenged. Contractors terminated for cause face: bond claims by the surety to fund completion, reputation damage, and difficulty getting future work. Both sides should consult construction counsel before termination.