FAQ
FAQ: Early termination of the contract
I.1 Who can terminate an alliance contract early?
In accordance with the recommendations of Factsheet SIA 2065, the alliance agreement provides for the unilateral right of the client to terminate the alliance agreement with effect for all alliance partners at any time (at the latest by the time of acceptance).
Depending on its decision, termination may take place within a certain period, after completion of certain work or with immediate effect.
I.2 What are the reasons that could lead to early termination of the alliance agreement?
The alliance partners stipulate in the alliance agreement the circumstances under which the principal can order a termination.
Such circumstances may be, for example
- the impossibility of achieving the client’s objectives
- the discontinuation and fundamental change in the client’s requirements
- the client’s acutely imminent or actual insolvency
- the absence or occurrence of external events specifically expected or feared in the specific project (e.g. of an economic or political nature)
I.3 How are own costs remunerated in the event of premature termination of the alliance agreement (remuneration level 1)?
In the event of a termination ordered by the client, the realization partners are entitled to remuneration for all services rendered in accordance with the contract up to the termination in accordance with the remuneration agreements of the alliance agreement, including the investments made in accordance with the contract. They are also entitled to remuneration for the services to be provided as a result of the dissolution.
I.4 Is there a entitlement to compensation for loss of profit (compensation level 2) in the event of premature termination of the alliance agreement?
The profit share for the services provided until the contract is terminated must be paid in accordance with the remuneration agreements in the alliance agreement.
However, the Factsheet SIA 2065 also recommends making an agreement that there is no claim for loss of profit (e.g. within the meaning of Art. 377 OR or Art. 184 SIA 118:2013) or similar. Such a claim would not be in line with the principles of a project alliance.
I.5 In the event of early termination of the alliance agreement, how are the additional/reduced costs shared by the realization partners (remuneration level 3)?
Remuneration according to level 3 (profit/loss participation; see 8.7) does not take place.
I.6 How is payment made in accordance with the bonus/malus regulations (remuneration level 4) in the event of early termination of the alliance agreement?
The alliance agreement must regulate whether certain suitable parts of the valuation system of remuneration level 4 are to be applied in the event of the dissolution of the alliance.