No, they can't just cancel for any reason they want; they have to be fair. The court explained that a contract isn't a real promise if one person can back out whenever they feel like it for no good reason. All contracts have an unspoken rule that everyone must act in 'good faith,' which means being honest and not trying to cheat the other person. Using a 'convenience' clause just to get a cheaper price after you've already made a deal is not playing fair. It's like trying to get back an opportunity you already gave up. The court sent the case back to the first judge to decide if Questar's actions were truly unfair and in 'bad faith' based on this rule.

Yes, Questar might have been wrong to end the contract. The court needs to look more into whether Questar was being unfair because:

1) The judge found Questar planned to hire the other company after already hiring CB Flooring.

2) The judge found CB Flooring didn't do anything to risk finishing the job on time.

3) The judge found Questar never told CB Flooring it was unhappy with their work.

4) The judge found CB Flooring wasn't using the change request unfairly against Questar.

The lower court has to decide if Questar broke the contract by ending it unfairly, going against what CB Flooring reasonably expected based on their agreement. Questar may have acted badly if its reasons made no business sense, if it just wanted a better deal with the other company, or if it didn't try to keep things working with CB Flooring.

No, a 'termination for convenience' clause in a private contract does not grant an unrestricted right to terminate and is limited by the implied duty of good faith and fair dealing. Unlike government contracts where broad termination powers are recognized, private contracts are governed by common law principles. An unlimited right to terminate would render the contract illusory and unenforceable, especially where the contract specifies a fixed duration. Maryland law implies a covenant of good faith and fair dealing in every contract, which constrains a party's exercise of discretion. A party cannot exercise a termination for convenience clause in bad faith, such as to 'recapture' an opportunity it gave up by entering the contract, like shopping for a better price. The trial court correctly determined the clause was not unlimited, but it is unclear if it applied the proper legal standard for bad faith. Therefore, the case is remanded for the trial court to determine whether Questar terminated the subcontract in bad faith, considering if its actions were commercially reasonable and not merely a pretext to secure a better bargain.

Yes, the termination for convenience clause may be enforceable, subject to an implied obligation to exercise the right to terminate in good faith and in accordance with fair dealing. The case is remanded to resolve discrepancies and determine if Questar acted in bad faith because:

1) The trial judge found that Questar "schemed" to contract with CTI after already contracting with CB Flooring. 

2) The trial judge found CB Flooring did nothing to jeopardize timely performance of the subcontract.

3) The trial judge found Questar never communicated to CB Flooring its asserted dissatisfaction with CB Flooring's performance.

4) The trial judge found CB Flooring was not using the change order as leverage against Questar.

On remand, the trial court must determine if Questar breached the subcontract by exercising its termination right in bad faith, inconsistent with CB Flooring's reasonable expectations under the subcontract. Questar may have acted in bad faith if its asserted reasons for termination were not commercially reasonable, if it sought to recapture a better deal with CTI, or if it did not make reasonable efforts to keep the subcontract convenient.

Questar Builders, Inc. v. CB Flooring, LLC

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