A contract terminated for convenience should be permitted to run to completion when the price of the undelivered balance of the contract is less than which amount?

A contract terminated for convenience should be permitted to run to completion when the price of the undelivered balance of the contract is less than which amount?

• A. $50,000
• B. $5,000
• C. $50
• D. $500

Answer: (B)

When a contract is terminated for convenience, the decision hinges on the cost to finish the remaining work. If the undelivered balance can be completed for less than a small threshold, it’s cheaper to let the contractor finish the job rather than go through a full termination settlement. The standard threshold used is five thousand dollars, so if finishing the remaining work would cost less than that, the contract should be allowed to run to completion. The other amounts listed are not the cutoff used in this rule (fifty thousand, five hundred, or fifty dollars would not apply), whereas five thousand dollars is the appropriate limit.

When a contract is terminated for convenience, the decision hinges on the cost to finish the remaining work. If the undelivered balance can be completed for less than a small threshold, it’s cheaper to let the contractor finish the job rather than go through a full termination settlement. The standard threshold used is five thousand dollars, so if finishing the remaining work would cost less than that, the contract should be allowed to run to completion. The other amounts listed are not the cutoff used in this rule (fifty thousand, five hundred, or fifty dollars would not apply), whereas five thousand dollars is the appropriate limit.