Sunday, April 13, 2014

Does continuing work void a termination?

Sometimes I’m amazed by some of the opinions expressed on on-line contracts forums. They do provide me with subject matter to write about.

In the situation the individual said that the contract had been terminated by the employer but they continued to perform work. In his opinion he felt that the continuing of work voided the termination. That simply does not happen. Once a contract is terminated, it has ended, except for any obligations that were agreed to survive the termination. Once that contract has been terminated if there is continuing work being performed it needs to be done either under a new contract, or the work is being done without no contract in place. Creating that new contract could be as easy as writing a one page agreement that incorporates the terms of the terminated agreement for the remaining scope of work with a new period of performance.

A further concern he had was the employer was seeking to go against some of the guarantees in the terminated document over two years after the agreement was terminated. For the employer to be able to do that you would need to check two things. First, since the agreement was terminated did the guarantees survive that termination.The second thing to be checked is what is the statute of limitations in that jurisdiction for bringing a contract claim. You see in many jurisdictions an action under contract has a two year statute of limitations. If that statute of limitations had passed, they may no longer have the right to make a claim against the guarantee. The guarantee only applied to the contract that was terminated. It did not apply to the additional work where there was no contract. Allowing additional work to be performed outside of the original contract does not extend the statute of limitations period on the terminated contract.

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