§ 11671 Contract Cancellation Revenue Protection

This law says the government can't cancel a contract or lease unless they're sure they'll get at least the same amount of money they would have gotten if they didn't cancel it.

Key Takeaways

•The government can't just cancel a contract or lease whenever they want.
•They have to make sure they'll get at least the same amount of money if they cancel it.
•This is to protect the government's money and make sure they don't lose out.

Example

Imagine the government rented out a building for 10 years, but after 5 years, they want to cancel the lease.

They can only cancel it if they're sure they'll make the same amount of money another way, like renting it to someone else for the same price.

How to Calculate

Total revenue from cancellation ≥ Total revenue from not canceling

Calculate the total money the government would get if they didn't cancel the contract or lease.
Calculate the total money the government would get if they canceled the contract or lease.
Compare the two amounts. If the money from canceling is equal or more, they can cancel it.

The government has a 10-year lease for $10,000 per year. After 5 years, they want to cancel it.

Result: Since $60,000 (from canceling) is more than $50,000 (from not canceling), they can cancel the lease.

The department shall not cancel any contract or lease under the next preceding section unless and until it first determines and assures itself that notwithstanding the cancellation, it will receive and be paid a total revenue or consideration at least equal to that which would be received by it were the contract or lease not canceled, and within the unexpired portion of the term of the contract or lease. (Amended by Stats. 1957, Ch. 1932.)

This law says the government can't cancel a contract or lease unless they're sure they'll get at least the same amount of money they would have gotten if they didn't cancel it.

Key Takeaways

•The government can't just cancel a contract or lease whenever they want.
•They have to make sure they'll get at least the same amount of money if they cancel it.
•This is to protect the government's money and make sure they don't lose out.

Example

Imagine the government rented out a building for 10 years, but after 5 years, they want to cancel the lease.

They can only cancel it if they're sure they'll make the same amount of money another way, like renting it to someone else for the same price.

How to Calculate

Total revenue from cancellation ≥ Total revenue from not canceling

Calculate the total money the government would get if they didn't cancel the contract or lease.
Calculate the total money the government would get if they canceled the contract or lease.
Compare the two amounts. If the money from canceling is equal or more, they can cancel it.

The government has a 10-year lease for $10,000 per year. After 5 years, they want to cancel it.

Result: Since $60,000 (from canceling) is more than $50,000 (from not canceling), they can cancel the lease.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 11671 Contract Cancellation Revenue Protection

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References