2.18 PFI guidance recommends that the contract should deal comprehensively with the consequences of early termination. It recommends stronger rights to terminate for liquidation than are contained in the 1993 Armouries deal (paragraph 1.67). The public sector body should simply have the right to terminate the contract for the private sector party's insolvency and there is no mention of any specific period of grace, as on the Armouries deal, other than the usual periods during which the client agrees to hold off terminating while the private sector party rectifies the default or the banks step in.11
2.19 Guidance also recommends that the contract spell out the level of poor service provision at which the public sector body can terminate the contract for the private sector party's default.12 The existence of such a clause on this deal would have strengthened the Armouries' position when discussing RAI's alleged poor maintenance performance, compared to the actual contract provision agreed which allowed termination only for fundamental breach of contract without defining what this constituted (paragraph 1.58).
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11 Standardisation of PFI Contracts paragraph 20.2.1.1