Code of Maryland Regulations
Title 21 - STATE PROCUREMENT REGULATIONS
Subtitle 07 - CONTRACT TERMS AND CONDITIONS
Chapter 21.07.01 - Mandatory Contract Provisions - All Contracts (except as provided under COMAR 21.05.07, 21.07.02, and 21.07.03)
Section 21.07.01.11 - Termination for Default
Universal Citation: MD Code Reg 21.07.01.11
Current through Register Vol. 51, No. 19, September 20, 2024
Mandatory provision for all contracts. One of the following clauses is preferred:
A. Alternate Clause - Termination for Default (short form).
"If the Contractor fails to fulfill its obligation under this contract properly and on time, fails to provide any required annual and renewable bond 30 days prior to expiration of the current bond then in effect, or otherwise violates any provision of the contract, the State may terminate the contract by written notice to the Contractor. The notice shall specify the acts or omissions relied upon as cause for termination. All finished or unfinished work provided by the Contractor shall, at the State's option, become the State's property. The State shall pay the Contractor fair and equitable compensation for satisfactory performance prior to receipt of notice of termination, less the amount of damages caused by Contractor's breach. If the damages are more than the compensation payable to the Contractor, the Contractor will remain liable after termination and the State can affirmatively collect damages. Termination hereunder, including the determination of the rights and obligations of the parties, shall be governed by the provisions of COMAR 21.07.01.1IB."
B. Alternate Clause - Termination for Default (long form).
"(1) The State may, subject to the provisions
of paragraph (3) of this regulation, by written notice of default to the
Contractor, terminate the whole or any part of this contract in any one of the
following circumstances:
(a) If the
Contractor fails to perform within the time specified herein or any extension
thereof;
(b) If the Contractor fails
to provide any required annual and renewable bond 30 days prior to expiration
of the current bond then in effect; or
(c) If the Contractor fails to perform any of
the other provisions of this contract, or so fails to make progress as to
endanger performance of this contract in accordance with its terms, and in
either of these two circumstances does not cure such failure within a period of
10 days (or such longer period as the procurement officer may authorize in
writing) after receipt of notice from the procurement officer specifying such
failure.
"(2) In the
event the State terminates this contract in whole or in part as provided in
paragraph (1) of this clause, the State may procure substitute performance upon
terms and in whatever manner the procurement officer may deem appropriate, and
the Contractor shall be liable to the State for any excess costs for substitute
performance; provided, that the Contractor shall continue the performance of
this contract to the extent not terminated under the provisions of this
clause.
"(3) Except with respect to
defaults of subcontractors, the Contractor shall not be liable for any excess
costs if the failure to perform the contract arises out of causes beyond the
control and without the fault or negligence of the Contractor. Such causes may
include, but are not restricted to, acts of God or of the public enemy, acts of
the State in either its sovereign or contractual capacity, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes, and unusually
severe weather; but in every case the failure to perform shall be beyond the
control and without the fault or negligence of the Contractor. If the failure
to perform is caused by the default of a subcontractor, and if the default
arises out of causes beyond the control of both the Contractor and
subcontractor, and without the fault or negligence of either of them, the
Contractor shall not be liable for any excess costs for failure to perform
unless substitute performance for the subcontractor was obtainable from another
source in sufficient time to permit the Contractor to meet the performance
schedule.
"(4) If, after notice of
termination of this contract under the provisions of this clause, it is
determined for any reason that the Contractor was not in default under the
provisions of this clause, or that the default was excusable under the
provisions of this clause, the rights and obligations of the parties shall, if
the contract contains a clause providing for termination for convenience of the
State, be the same as if the notice of termination had been issued pursuant to
such clause. If, after notice of termination of this contract under the
provisions of this clause, it is determined for any reason that the Contractor
was not in default under the provisions of this clause, and if this contract
does not contain a clause providing for termination for convenience of the
State, the contract shall be equitably adjusted to compensate for such
termination and the contract modified accordingly; failure to agree to any such
adjustment shall be a dispute concerning a question of fact within the meaning
of the clause of this contract entitled "Disputes."
"(5) If this contract is terminated as
provided in paragraph (1) of this clause, the State, in addition to any other
rights provided in this clause, may require the Contractor to transfer title
and deliver to the State, in the manner, at the times, and to the extent, if
any, directed by the procurement officer, (a) the fabricated or unfabricated
parts, work in progress, completed work, supplies, and other material produced
as a part of, or acquired in connection with the performance of, the work
terminated by the Notice of Termination, and (b) the completed or partially
completed plans, drawings, information, and other property which, if the
contract had been completed, would have been required to be furnished to the
State; and the Contractor shall, upon direction of the procurement officer,
protect and preserve property in the possession of the Contractor in which the
State has an interest. Payment for completed supplies delivered to and accepted
by the State shall be at the contract price. Payment for manufacturing
materials delivered to and accepted by the State and for the protection and
preservation of property shall be in an amount agreed upon by the Contractor
and procurement officer; failure to agree to such amount shall be a dispute
concerning a question of fact within the meaning of the clause of this contract
entitled "Disputes." The State may withhold from amounts otherwise due the
Contractor hereunder such sum as the procurement officer determines to be
necessary to protect the State against loss because of outstanding liens or
claims of former lien holders.
"(6)
The rights and remedies of the State provided in this clause shall not be
exclusive and are in addition to any other rights and remedies provided by law
or under this contract.
"(7) As
used in paragraph (3) of this clause, the terms, "subcontractor" and
"subcontractors" mean subcontractor(s) at any tier."
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