Hi,a Fixed Contract, issued for a four year period as from 26.02.2000
until
26.02.2004, by a US-company to a concessionaire in Germany, has been
terminated
by the US-company to the end of October 02. Reason: FOR CONVENIENCE.
The contract was issued by US-LAW. The maincontract contains a clause
of termina-
tion with a timeframe of 90 days for both parties. This use to apply
for a
normal contract issued for a normal period of two years with a higher
fee for
the concessionaire. This FIXED CONTRACT for 4 years was offered by the
US-company for a less fee of 19% for the concessionaire. This gave the
concessio-
naire a chance to invest in order to save tax. Here my question: Does
this
FIXED CONTRACT, issued recently, abolish this clause of 1994 and can
the con-
cessionaire expect a compensation ?

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Request for Question Clarification by maniac-ga on 18 Sep 2002 18:28 PDT

Hello Manne,

I can do some research on this, but I would like a little more
information before posting an answer.

 - Was the clause of 1994 in a previous contract or the current one?
If in the previous contract, your current contract will likely
supersede it.
 - Is there a penalty clause for early cancellation of the contract?
This clause or one related to it should specify the compensation the
concessionaire will receive.
 - Is there one or more clauses that describe mitigating factors
(e.g., act of god) that could affect the contract?

Please describe these and I will look up some relevant contract law
references and make some suggestions.

  --Maniac

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Clarification of Question by manne-ga on 19 Sep 2002 05:31 PDT

Hi maniac,
the clause for termination is with each contract attached
in a extra package with all the guidelines for concessions.
A normal contract runs 2 years,if both partners are happy it
will be extended for fuerther 2 years and than one more year.
After 5 years the contract will be free for solicitation.Best
offer gets the contract.A FIXED CONTRACT runs direct for a cer-
tain time,4 or 5 years,depending on the offer from the conces-
sionaire. In this case the offer came from the other party.
19% less fee as normal, for 4 years.
There are no further clauses concerning a termination. By 
german law,a fixed contract with a set time,issued after the
clause of termination, abolish this clause of 1994. I don't know
what the US-law says in this case.
Thank you, Manfred.........

Hello Manne,

I have usually seen "Termination for Convenience" in reference to
contracts between the US government and a supplier. However, it can
also apply between companies. Summary material that may help you
understand this concept are includes...

A short definition, including an explanation of supplier rights
http://law.freeadvice.com/general_practice/contract_law/termination_for_convenience.htm
along with a number of other contract law summaries referenced at
  http://law.freeadvice.com/general_practice/contract_law/

A definition included as part of a "Business Owner's Toolkit"
  http://www.toolkit.cch.com/text/P09_3310.asp

Described as part of an "exit strategy"
  http://www.firmbuilder.com/articles/5/32/544/

Contract Termination described by Kenneth M. Block, Brown Raysman
Millstein Felder & Steiner LLP
http://216.239.51.100/search?q=cache:SWQ2ynkmY70C:www.brownraysman.com/publications/outsourcenetwork/outsourceletter0004.htm+contract+termination+convenience&hl=en&ie=UTF-8
(a cache reference, for some reason, the original is not available)

Searching for more of these kind of sites, use a phrase such as
  termination contract convenience law

In researching the term "fixed contract" in US sites, it is generally
applied to small tasks of short duration. An example would be
generation of a report for a fixed fee of $2000. I cannot find any
references for tasks of the duration you are talking about (two to
five years). Some of the references I did find include:

Engineering and construction related tasks
  http://www.rjcsolutions.com/info/faq.htm

An article referring to suits against title companies. The "Fixed
Contract" refers to the production of "accurate information" in the
report.
  http://www.mf-mblawyers.com/articles/Oct96.html

As a choice in work agreements for help to an inventor:
  http://www.patentdesk.com/tool_kit.htm

The search phrases for this include
  "fixed contract" law

I can also see a number of UK and European sites that refer to "Fixed
Contracts" and the law, so I can understand your point of view.

All this does not mean that you have no options at this point:
 - you can generally recoup all costs up to the date of termination
 - you may be able to recover costs that are related to the
termination itself
This latter clause can be surprisingly broad. The company I work for
had two smaller contracts with the US government that were terminated
for convenience. This involved about a dozen employees in total. We
did not have other work for many of them and they were laid off.
Because the layoff was directly related to the contract termination -
payments made to those employees were costs that were billable to the
government (in a normal situation, these charges would *not* be
billable).

The situation you describe sounds like one where you need competent
legal counsel, a specialist in contract law. Some of the sites I
referred to above include referral services if that would be helpful.
A careful review of the contract clauses will be necessary.

Do not hesitate to ask for further clarification on this topic. Good
luck on getting proper reimbursement for your company.

  --Maniac

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Clarification of Answer by maniac-ga on 21 Sep 2002 10:10 PDT

Hello Manne,

From your rating
  Is there a chance to fight back?

Generally no. If this is a government contract, this is a standard
clause in the Federal Acquisition Regulations. There is plenty of case
law where it has been held to be legal.

As I mentioned before, this is an opportunity to charge the government
for termination fees on a variety of things that were not previously
chargeable to the government. In particular...
 - performance costs incurred up to the date of termination
 - certain costs that continue after the date of termination. An
example of this is remaining lease payments for a facility acquired
for the purpose of the contract.
 - so-called "termination settlement expenses". In other words the
costs to terminate the contract and submit a termination claim to the
Government
 -profit or fee for work performed
and there may be other items.

Instead of fighting back, would it be acceptable to get paid for the
real costs to your company instead? If so - the same recommendation
applies - get a competent lawyer to advise you.
  --Maniac

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Request for Answer Clarification by manne-ga on 24 Sep 2002 02:31 PDT

Hi, maniac,
just want to correct my rating up to a 5 star.
Your answer contained correct information and also a goog advice.
It is a AAFES contract issued for Germany by AAFES EUROPE. They don't
go directly under the government. I have got a good lawyer and we will 
see what can be done.  
Thanking you 
manne

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Clarification of Answer by maniac-ga on 24 Sep 2002 15:29 PDT

Glad to have helped.
  --Maniac

I am not happy with the answer. I was aware what the termination for
convenience stands for. I actually wanted to know, if there will be 
a chance to fight back. Yes it is a government-contract with mafia 
methodes.They entice you with a 4 year contract if you go down with
your fee, knowing very well that they can terminate when ever they
feel like it. Is there no courtcase on file with simular circumstances.
Thanks Manfred