WHEN A LATER CONTRACT DOES NOT WIPE THE SLATE CLEAN
In Belong (Construction) Ltd v Seddon Construction Ltd [2026] EWHC 1275 (TCC), the TCC held that a later JCT contract did not extinguish liability for earlier breaches under a PCSA, despite wording that those rights and liabilities would be “subsumed into and be subject to” the later contract (Judgment [8], [11], [16], [36]–[47]).
Background. The Claimant (“Belong”) Belong first engaged the Defendant (“Seddon”) under a pre-construction services agreement dated 27 May 2020 (the “PCSA”). The parties later entered into a construction contract dated 18 December 2020, in the form of the JCT Standard Building Contract (with Quantities), 2016 Edition, with a schedule of amendments (the “JCT Contract”) (Judgment [2], [4]–[5]).
The dispute arose after the contract administrator refused Seddon an extension of time in relation to air sealing works. The refusal was based on the view that the need for those works during the main contract resulted from Seddon’s earlier failure, under the PCSA, to open up and test the existing air sealing works (Judgment [2]–[5]).
Seddon argued that it had no such liability, submitting that the relevant open up and testing obligation appeared in the PCSA and the proposed contract documents, but not in the final JCT Contract as executed (Judgment [5]).
Seddon also relied on clause 2.3 of the PCSA. That clause provided that, upon execution and completion of the later contract, the parties’ respective “rights and liabilities” in respect of matters with which the PCSA was concerned would be “subsumed into and be subject to” that later contract (Judgment [5], [11]).
An adjudicator accepted Seddon’s case. Belong challenged that outcome by Part 8 proceedings and succeeded before HHJ Stephen Davies, sitting as a High Court Judge, who held that Belong did not lose its right to complain about Seddon’s failure to comply with the open up and testing obligation in the PCSA as a result of the subsequent entry into the JCT Contract, even though the JCT Contract did not contain that open up and testing obligation (Judgment [6]–[8]).
Obligations are not the same as liabilities. The central issue was the drafting of clause 2 of the PCSA (Judgment [11]–[14]). Given its importance, we excerpt clause 2 from Judgment [11] below:
“2.1. The parties' obligations under this agreement start on the date of this agreement or, if earlier, the date on which the Contractor commenced performance of the Pre-Construction Services until the earlier of: 2.1.1 the execution and completion of the Contract; or 2.1.2 the Contractor or Employer issuing a notice of termination of this agreement under Clause 11.
2.2. Before execution and completion of the Contract, the rights and obligations of the Employer and the Contractor in relation to the Works shall be governed by the provisions of this agreement supplemented by the Proposed Contract Documents. If there is any conflict or difference between this agreement and the Proposed Contract Documents, the Proposed Contract Documents will prevail.
2.3. On the execution and completion of the Contract, the parties' respective rights and liabilities in respect of all matters with which this agreement is concerned (including any design performed or any work carried out or order placed under Clause 4.3) shall be subsumed into and be subject to the Contract.”
(emphasis added)
The court noted that clause 2.1 referred to the parties’ “obligations”, clause 2.2 to their “rights and obligations”, and clause 2.3 to their “rights and liabilities” (Judgment [11], [13]). The court held that this change in language was deliberate and significant, stating that “… it appears reasonably clear that each sub-clause is intended to deal with a different topic. The difference in wording between obligations and liabilities would appear to be intentional” (Judgment [12], [14]–[15], [22]).
On the court’s analysis, once the JCT Contract was executed, there were no continuing primary obligations under the PCSA. However, there could still be continuing liabilities for breaches committed before the JCT Contract was entered into (Judgment [14]–[17], [22]).
The court relied on the distinction between primary and secondary obligations explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827 (Judgment [19]–[22]).
In particular, the court held at Judgment [19] that “… it is conventional to equate being under a secondary obligation under a contract to being under a liability for breach of a primary obligation, whereas one would not usually equate being under a primary obligation to do something as being under a liability …”
This distinction was decisive to the court finding that the later JCT Contract superseded ongoing performance obligations under the PCSA, but did not automatically erase accrued liability for earlier breaches (Judgment [14]–[17], [22]).
What “subsumed into and subject to” meant. The court rejected the argument that “subsumed into and subject to” meant that all liability under the PCSA disappeared unless the same liability also existed under the later JCT Contract (Judgment [38]–[39], [40]-[46]).
Instead, the court held that liabilities for pre-existing breaches remained in existence. From the date of the JCT Contract, however, they were to be enforced subject to the contractual machinery of that later contract (Judgment [42], [44], [46]–[47]).
The court also relied on clause 16 of the PCSA. That clause expressly contemplated legal action under the PCSA up to 12 years from practical completion of the works under the later contract. The court treated this as a strong indication that PCSA claims were intended to survive entry into the JCT Contract (Judgment [41]–[43]).
The result was that Belong had not lost the right to rely on Seddon’s earlier breach simply because the final JCT Contract omitted the earlier open up and testing obligation (Judgment [8], [34], [46], [49]–[50]).
Why this matters for drafting. This decision is an important reminder that parties should not assume that a later contract will cleanly replace an earlier one. The court held that pre-existing liabilities under the PCSA survived entry into the JCT Contract and were instead made subject to that later contract (Judgment [38]–[46]).
If the intention is that accrued claims for earlier breaches are released, waived, or extinguished, that should be stated in clear terms.
If the intention is instead that those liabilities survive, but are to be pursued only through the procedures and limitations of the later contract, that should also be spelt out expressly. The judgment treated “subject to” as bringing surviving liabilities within the later contract’s machinery, including matters such as dispute resolution provisions, time bars, and exclusions or limitations of liability (Judgment [42]–[46]).
For parties entering staged construction arrangements, Belong (Construction) Ltd v Seddon Construction Ltd [2026] EWHC 1275 (TCC) is therefore a useful reminder that changes made between pre-construction documents and the final building contract can become central to later disputes over time and money. This is especially when the later contract changes (or may be read as changing) the substantive allocation of risk. A careful review before the later contract is signed may avoid a much more expensive dispute later.
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