Termination for convenience in the 2025 CM forms

Until 2025, an owner on a CCDC construction management contract had no clean way to stop a project it no longer wanted. The 2025 editions of CCDC 5A and CCDC 5B changed that: the owner may now suspend the project or terminate the contract even when the construction manager has done nothing wrong. The right is useful, but it has a price, and the price depends on when you use it. This lesson shows what the forms say, what commentators flag and how an owner prices the exit before signing.

Learning outcomes

• Explain the owner's right to suspend or terminate for convenience in CCDC 5A-2025 and CCDC 5B-2025, and why CCDC 17-2025 does not have it.
• Distinguish the CCDC 5B break fee in the pre-construction phase from direct damages and loss of profit in the construction phase.
• Describe the good faith limits Canadian courts place on contractual discretion and what they mean for a termination right.
• Estimate the owner's exit cost at different points of a construction management version of Northgate.

The lesson

What changed in 2025

Under the 2010 editions, the owner could end a construction management contract mainly for the construction manager's default. Miller Thomson describes the old payment position: under CCDC 5A-2010 the construction manager was paid for services properly performed up to termination, and under CCDC 5B-2010 it was paid costs properly incurred plus a proportionate share of its fee. There was no express right to walk away for the owner's own reasons.

The 2025 editions, released by CCDC in June 2025, add one. Gowling WLG summarizes the trigger: the owner may suspend the project or terminate the contract if it is unwilling or unable to proceed, even if the construction manager is not in default. Clark Wilson places the right in GC 6.1 of CCDC 5A and GC 7.1 of CCDC 5B. Read the clause itself before relying on it: the notice, payment and close-out steps are in the form, and the summaries do not reproduce them.

The right was not added to CCDC 17-2025, the trade contract covered in lesson 13. Gowling explains the reasoning: by the time an owner signs trade contracts, it should be committed to building. If an owner wants a convenience exit from its trades, it has to write one into the Supplementary Conditions, and trades will price that risk into their bids.

What the construction manager is paid

The 2025 forms split compensation by phase, which matches the phase-based fee structure covered in lesson 15.

• CCDC 5B, pre-construction phase: a break fee. Clark Wilson, BLG and Pallett Valo describe a break fee calculated as a pre-agreed percentage of the applicable construction cost estimate. BLG ties it to the Class A to D estimate in force; Miller Thomson says the percentage applies to the most recent accepted estimate and can be adjusted as the estimate changes. The percentage is a blank the parties fill in.
• CCDC 5B, construction phase: direct damages. If the owner terminates once construction has started, the construction manager may recover the direct damages it has sustained, including reasonable loss of profit, according to Clark Wilson and BLG.
• CCDC 5A. Pallett Valo describes the CCDC 5A position as payment for services provided plus reasonable termination costs or fees, and Miller Thomson describes an agreed termination fee for both forms. Check the executed form and its Articles for the exact amounts.

BLG raises a drafting point owners should not ignore. Both forms also contain a mutual waiver of consequential damages, and neither explains how that waiver interacts with a claim for loss of profit after a termination for convenience. If the owner's position is that lost profit is limited to the fee on the unperformed work, say so in the Supplementary Conditions.

Suspension is the softer tool

The same clause lets the owner suspend rather than terminate. Suspension keeps the construction manager and its knowledge on the project while the owner sorts out financing, approvals or a change in business case. It is not free: the construction manager's standing costs continue, and CCDC forms commonly give the other party its own termination right if a stoppage runs long enough. Check whether and when that applies in your executed form, and diarize it on day one.

Good faith still applies

A convenience clause looks unconditional, but Canadian contract law puts two limits around it. In Bhasin v. Hrynew, 2014 SCC 71, the Supreme Court of Canada recognized a duty of honest performance that parties cannot contract out of. In C.M. Callow Inc. v. Zollinger, 2020 SCC 45, the Court held that a party breaches it by knowingly misleading the other party about matters directly linked to performance, including in the run-up to a termination. In Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, the Court held that contractual discretion must be exercised reasonably, meaning consistently with the purpose for which it was granted.

The Canadian Bar Association article by Rose LLP notes that the Court did not decide whether the Wastech duty applies to termination for convenience clauses, so the point is open. For an owner the practical lesson is plain. The 2025 trigger is framed around the owner being unwilling or unable to proceed with the project. Using it to replace a construction manager with a cheaper one, while the project carries on, may invite an argument that the right was used for a purpose it was not granted for. And telling the construction manager that all is well while planning to terminate is the conduct Callow condemned.

What happens to the trades

The delivery structure decides what a termination leaves behind. Under CCDC 5A the owner holds every trade contract directly, so terminating the construction manager does not end them. The owner is left administering live CCDC 17 contracts, with no convenience exit from them, until it appoints a replacement. Under CCDC 5B the trade subcontracts belong to the construction manager. Ending its contract leaves those subcontracts in the construction manager's hands unless the owner has an assignment right. Figure 3 in the Northgate example shows the difference.

Northgate worked example

Northgate Distribution Centre (fictional) is a 12,000 m² tilt-up warehouse in Vaughan for Northgate Logistics Inc. (fictional), procured in reality as design-bid-build under CCDC 2-2020; see the Northgate fact sheet.

Pricing the exit at three points

The owner's representative should price the exit before the contract is signed, not when the board asks. Figure 2 compares the fee-related exposure at three points. In the pre-construction phase, with a Class C estimate of $35,300,000 accepted, the break fee is 0.5% of that, or $176,500, on top of pre-construction fees earned. Once construction is 25% complete, the construction manager's lost profit on unperformed work is roughly the fee on the remaining 75%, about $881,000. At 75% complete it falls to about $294,000.

Two conclusions follow. First, the break fee is the cheapest exit Northgate Logistics will ever have, and it is fixed in advance, so it belongs in the project budget as a known number. Second, the most expensive time to exit is just after construction starts, when most of the fee is still unearned. If the owner's financing or approvals are uncertain, the gate to watch is the decision to move from pre-construction to construction.

What is left behind

Owner's move

• Fill in the break fee deliberately. Agree the percentage, say which estimate class it applies to at each stage, and carry the resulting number in the budget.
• Define lost profit. In the Supplementary Conditions, cap loss of profit at the unearned fee on unperformed work and state how the consequential damages waiver applies.
• Add an assignment right under CCDC 5B. Give the owner the option to take an assignment of selected subcontracts on termination, with subcontract consent built into the CM's subcontract form.
• Plan the CCDC 5A handover. Name who will administer the trade contracts the day after a termination, and require the construction manager to keep records in a form the owner can take over.
• Document the business reason. Record why the owner is unwilling or unable to proceed, and keep communications with the construction manager honest in the lead-up.

Common mistakes

1. Leaving the break fee blank or vague. A blank invites a dispute at the worst moment.
2. Using convenience to swap contractors. The trigger is about not proceeding with the project; using it for something else invites a good faith argument.
3. Assuming the trades go with the CM. Under CCDC 5A they stay with the owner.
4. Forgetting suspension clocks. A long suspension may hand the construction manager its own termination right.
5. Adding convenience exits to trade contracts without pricing them. Trades price the risk; decide if it is worth it.

Quick quiz

1. Under CCDC 5A-2025 and 5B-2025, when may the owner terminate for convenience?

   1. Only if the construction manager is in default
   2. If the owner is unwilling or unable to proceed, even without CM default
   3. Only after Ready-for-Takeover
   4. Only with the Consultant's approval

2. Under CCDC 5B-2025, what is the construction manager paid on a termination for convenience in the pre-construction phase, besides services to date?

   1. Loss of profit on the whole project
   2. Nothing more
   3. A break fee based on an agreed percentage of the applicable cost estimate
   4. The full construction-phase fee

3. Which 2025 CM form does not include an owner's right to terminate for convenience?

   1. CCDC 5A
   2. CCDC 5B
   3. CCDC 17
   4. None; all three include it

4. Which Supreme Court of Canada decision held that contractual discretion must be exercised reasonably, consistent with its purpose?

   1. Bhasin v. Hrynew
   2. Wastech
   3. Callow
   4. Ron Engineering

5. Under CCDC 5A, the owner terminates the construction manager for convenience mid-construction. What happens to the CCDC 17 trade contracts?

   1. They end automatically
   2. They transfer to the Consultant
   3. They continue between the owner and each trade
   4. They are assigned to the construction manager

Key terms

Termination for convenience

A right to end a contract without the other party being in default, on the terms the contract sets.

Suspension

A temporary stop to the project or the services, with the contract kept alive.

Break fee

Under CCDC 5B-2025, the agreed amount paid on a pre-construction termination for convenience, set as a percentage of the applicable cost estimate.

Class estimate

A construction cost estimate classed A to D by design maturity; Class D is earliest and least precise.

Direct damages

Losses that flow directly from the termination, which under CCDC 5B include reasonable loss of profit.

Duty of honest performance

The common law duty, from Bhasin and Callow, not to lie to or knowingly mislead the other party about the contract's performance.

References

1. Gowling WLG, Updates to the 2025 CCDC construction management contracts (July 2025).
2. Clark Wilson LLP, Key updates to the 2025 CCDC 5A, 5B and 17 (August 2025).
3. BLG, 2025 CCDC construction contract updates (2025).
4. Miller Thomson LLP, via Mondaq, Important updates to the CCDC 5A, 5B, 17 and 30 contracts (September 2025).
5. Pallett Valo LLP, 2025 CCDC contract updates: what construction professionals need to know (January 2026).
6. Alexander Holburn, via Mondaq, The new and improved CCDC 5B 2025 (2026).
7. Davies Ward Phillips & Vineberg, Unfettered contractual rights and discretion (March 2021), on Wastech, 2021 SCC 7.
8. Canadian Bar Association, Rose LLP, An inconvenient truth (March 2021), on Callow, 2020 SCC 45, and termination for convenience.

Verified on November 6, 2026.