Originally Posted by CAcop
You are just talking about a multiyear contract being cancelled early. I m talking, your company delivers the product and then the government says, "**** you, we ain't paying."
Can they do that per your contract with them?
I've never heard of it. Depends on what the law says. The government can't spend a dime until it is appopriated. Let me give you an example that might be sort of what you're talking about
I sell $1MM worth of instrumentation to a government entity on a lease. The lease has a term of 36 months. The gov requires an annual out clause in case the government doesn't appropriate the money. Its called a muni lease.
When the lease is signed, the 3rd party leasing company (or even finance company under our corporate umbrella) funds our company the entire amount (less finance charges). We're whole. Now, if the money doesn't get appropriated, the leasing company gets the equipment back. We have our money and they have used equipment that they have to figure out how to dispose of for pennies on the dollar. IOW, the finance company gets screwed.
What are you getting at? How is not paying for a delivered product relevant to this discussion?