Certified Texas Contract Manager Practice Exam

What is the result of a Termination for Cause?

1. The agency has fulfilled its obligations.

2. The contract automatically renews for another term.

3. The contractor is terminated due to breach of contract.

4. The contractor receives a penalty fee.

The correct answer is: The contractor is terminated due to breach of contract.

Termination for Cause refers specifically to a situation where a contractor fails to meet the terms and conditions outlined in a contract, leading to their termination. This could include a variety of breaches such as failure to perform work in a satisfactory manner, failure to meet deadlines, or not adhering to contract specifications. As a result, the correct outcome of a Termination for Cause is that the contractor is terminated due to breach of contract. In addition to this, the implications of such a termination can include the agency no longer being obligated to make payments for incomplete or unsatisfactory work, and potentially seeking damages depending on the severity of the breach. The other implications of this scenario, such as the agency fulfilling its obligations, the contract automatically renewing, or the contractor receiving a penalty fee, do not apply in the context of a Termination for Cause. Each of these options represents a different aspect of contract outcomes that are unrelated to the direct consequences of a breach leading to termination.