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A contract, or any part of a contract, should be terminated if it becomes unnecessary or if it is to be superseded by some other service. The supplier must be notified in writing of the termination and is entitled to the indemnity provided in the contract. If it is more advantageous to operate than to pay the indemnity, the service should be continued. Discontinuance of service under the contract may, in some instances, be to the advantage of the supplier. In these instances, if the supplier is willing to waive the indemnity, the waiver must be included in a contract modification discontinuing the service. In the case of highway or inland domestic water routes, the waiver must be included in a supplemental agreement signed by the supplier.
Suppliers should be provided as much advance notice as possible when a contract is to be terminated before the end of its term. Specific requirements for notice may be stated in the contract. A supplier may be notified by letter of intent to discontinue in advance of issuing a formal notice. In the case of highway, inland domestic water routes or air taxi, the termination must be approved by the manager, Transportation Portfolio, prior to being issued.
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