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Service Agreement Information Kit for Funded Organisations

3.14 Termination of agreement

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The Service Agreement can be terminated under the following circumstances:

  • termination for breach
  • termination by the department (on certain specified grounds)
  • termination without fault.

These processes are described below:

Termination for breach

If the organisation or the department is in breach of the Service Agreement, written notice will be provided to the party alleged to be in breach requiring that party to remedy the breach within thirty days of receiving the notice. If the breach is not satisfactorily remedied within thirty days, the party who gave notice may immediately terminate the Service Agreement by giving written notice.

The dispute resolution process (clause 11) can be entered into at any time during this process (see chapter 3.11).

Termination by the department

The Service Agreement can be terminated immediately if:

  • the organisation becomes insolvent
  • in case of an individual, the organisation becomes bankrupt, mentally incapacitated, dies, is incapacitated through illness for more than thirty days or is convicted of a crime punishable by imprisonment
  • the organisation has a change in control (being a change in any person who directly or indirectly exercises control over the organisation), which the department reasonably believes would negatively affect the organisation’s ability to comply with the Service Agreement
  • the organisation commits a serious or material breach of the Service Agreement, which is not capable of remedy;
  • the organisation behaves in a way that the department considers may be contrary to prevailing community standards, or may be regarded by the public as unacceptable, or may be detrimental to the reputation of the department if it continued its association with the organisation; or
  • the organisation breaches an essential term of the Service Agreement. Essential terms of the agreement are clauses 3.1(e), 3.6, 4.4, 4.5, 4.6 and 4.7.

If the department does not receive sufficient funds from either the Victorian Parliament or the Commonwealth Government to finance the relevant program or the services, or if there is a change in Victorian Government policy that affects the program or the services, the department may also terminate the Service Agreement by giving the organisation at least three months’ written notice.

In these particular circumstances (i.e. where the Service Agreement is being terminated due to not receiving sufficient funding or a change in policy), the department will pay reasonable costs (other than loss of profit or income) necessarily incurred and substantiated by the organisation that arise directly from the termination.

The dispute resolution process (clause 11) can be entered into at any time during termination of the Service Agreement (see chapter 3.11).

Termination without fault

Either party may terminate the Service Agreement with no fault attributed to the organisation or the department. In this case the terminating party must provide at least three months’ written notice to other party. Where this occurs, the party electing to terminate will pay the reasonable costs of the other party that arise directly from the termination. The total amount payable by the department on termination without fault will not exceed the total amount of funding that would have been payable under the Service Agreement if it had not been terminated (less any amount already paid under the Service Agreement).