When Can a Contractor Really Terminate Under a JCT Design & Build Contract?
The United Kingdom Supreme Court Clarifies Termination Rights in Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1
Introduction. In the recently delivered judgment in Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1 (“Providence”), the United Kingdom Supreme Court has resolved an important point of contractual interpretation under the widely used JCT Design and Build Contract (2016 edition).
The Court unanimously held that a contractor cannot serve a clause 8.9.4 termination notice unless it has first acquired – but chosen not to exercise – a right to terminate under clause 8.9.3.
Some Background. The JCT Design and Build Form is among the most widely adopted standard forms in the UK construction industry. Its termination provisions are commonly relied on in cash-flow disputes and defaults.
The dispute between Providence Building Services Limited and Hexagon Housing Association Limited concerned whether the Contractor could terminate the contract simply on the basis that the Employer repeated a specified default (which was late payment) under clause 8.9.4, even if the Contractor had never previously been entitled to terminate under clause 8.9.3.
In practical terms, this is about whether multiple minor breaches can, on their own, justify termination, or whether a contractor must first have had a substantive right to terminate that it chose not to exercise.
The facts in Providence. Hexagon (the “Employer”) engaged Providence (the “Contractor”) as the contractor under a JCT Design and Build contract.
The relevant contractual termination provision under the said contract is set out below:
“8.9 .1 If the Employer:
.1 does not pay by the final date for payment the amount due to the Contractor in accordance with clause 4.9 and/or any VAT properly chargeable on that amount; or
.2 fails to comply with clause 7.1 [number not used]; or
.3 fails to comply with clause 3.16,
the Contractor may give to the Employer a notice specifying the default or defaults (a ‘specified’ default or defaults).
8.9.2 If after the Date of Possession (or after any deferred Date of Possession pursuant to clause 2.4) but before practical completion of the Works the carrying out of the whole or substantially the whole of the uncompleted Works is suspended for a continuous period of the length stated in the Contract Particulars [2 months] by reason of any impediment, prevention or default, whether by act or omission, by the Employer or any Employer’s Person, then, unless it is caused by the negligence or default of the Contractor or any Contractor’s Person, the Contractor may give to the Employer a notice specifying the event or events (a ‘specified’ suspension event or events).
8.9.3 If a specified default or a specified suspension event continues for 14 days [28 days] from the receipt of notice under clause 8.9.1 or 8.9.2, the Contractor may on, or within 21 days from, the expiry of that 14 day [28 day] period by a further notice to the Employer terminate the Contractor’s employment under this Contract.
8.9.4 If the Contractor for any reason does not give the further notice referred to in clause 8.9.3, but (whether previously repeated or not):
.1 the Employer repeats a specified default; or
.2 a specified suspension event is repeated for any period, such that the regular progress of the Works is or is likely to be materially affected thereby,
then, upon or within a reasonable time [28 days] after such repetition, the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.”
The Employer failed to pay a monthly interim payment on time in December 2022.
The Contractor then served a notice of specified default under clause 8.9.1, but the Employer remedied the late payment within the 28-day cure period in clause 8.9.3. This meant that the Contractor never acquired the right to terminate under that clause.
Later that year, the Employer again failed to make an interim payment on time. The Contractor then served a notice of termination citing clause 8.9.4. This is the provision that allows termination if a specified default is repeated.
However, because clause 8.9.3 had never produced a right to terminate (as the employer cured the first breach), the question was this: could the Contractor validly now terminate under clause 8.9.4?
The Supreme Court’s interpretation of clause 8.9. The Supreme Court held that clause 8.9.3 gives a contractor the right to terminate – by giving a further notice – if a specified default continues for 28 days after notice. Clause 8.9.4 then addresses what happens if the contractor doesn’t give that further notice, but only if the specified default is repeated.
The wording of clause 8.9.4 begins:
“If the Contractor for any reason does not give the further notice referred to in clause 8.9.3…”
Accordingly, the key interpretive question was this: Does clause 8.9.4 operate in cases where the contractor never accrued the right to terminate under clause 8.9.3?
The Supreme Court unanimously held no. clause 8.9.4 applies only where the contractor has a previously accrued right to terminate under clause 8.9.3 that it has chosen not to exercise.
The pertinent passage ([32]) from Providence is set out below:
“… In my view, they make clear that the Contractor must have had an accrued right to terminate under clause 8.9.3 before clause 8.9.4 applies; or as Mr Lewis put it, clause 8.9.3 is the “gateway” to clause 8.9.4. Put another way still, it is only if the Employer has failed to cure any earlier specified default within 28 days that the Contractor can terminate for a repetition of the specified default. The Contractor may not have exercised its earlier right to terminate for various reasons. It may have been, for example, that the late payment was made by the Employer, albeit after the 28 days allowed for cure, and the Contractor exercised the choice to accept that payment and to continue with the contract; or the Contractor may have inadvertently failed to exercise its right to give the further notice of termination. The precise reason why the Contractor failed to give the further notice to terminate is not significant because the words “for any reason does not give the further notice [to terminate]” clearly cover all possible reasons.”
Giving the lead judgment with the agreement of the entire Court, Lord Burrows held that:
The natural and ordinary meaning of the opening words of clause 8.9.4 is “parasitic on” clause 8.9.3. If clause 8.9.4 were meant to operate independently, its opening words in clause 8.9.4 would not need to refer to clause 8.9.3 in that way (see [32] – [33] of Providence).
To interpret clause 8.9.4 as effective even without a previously accrued right to terminate would render the reference back “superfluous” (see [33] of Providence).
Contractors could otherwise terminate over minor or trivial default, such as a series of barely late payments, which would “produce an extreme outcome” (see [35] of Providence).
The Supreme Court rejected the Court of Appeal’s attempt to draw symmetry with the employer’s termination rights in clause 8.4 (which has different wording and logic) (see [38] of Providence).
What does this mean for contractors. This decision is significant for construction practitioners for a number of practical reasons:
First, under a JCT Design and Build Contract, contractors cannot treat clause 8.9.4 as a clause that activates merely on repetition of defaults. They must first let a specified default genuinely ripen into a right to terminate under clause 8.9.3, before right to terminate under clause 8.9.4 becomes available.
Second, once a right to terminate accrues under clause 8.9.3, an employer’s subsequent cure of the breach does not prevent a contractor from terminating for repeated default under clause 8.9.4. Employers should therefore be astute to cure defaults within the specified cure period.
Conclusion. The Supreme Court in Providence has provided much-needed clarity on contractors’ termination rights under the JCT Design and Build Contract. The idea that clause 8.9.4 stands alone has been definitively rejected. Contractors must first have a genuine right to terminate under clause 8.9.3 before relying on clause 8.9.4; termination rights are not triggered simply by repetition alone.
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