Providence Building Services Ltd v. Hexagon Housing Association Ltd
On 15 January 2026, the Supreme Court overturned a Court of Appeal decision that termination under a Joint Contracts Tribunal (JCT) contract was possible, even where the original breach had been remedied, returning clarity to the interpretation of termination under a JCT for repeated breaches.
The right to terminate for repeated breaches of contract
Clause 8.9 of the JCT Design and Build Contract 2016 outlines how a contractor can terminate a contract for employer defaults, including for non-payment. This involves issuing a Default Notice, allowing 28 days for the default to be remedied, then issuing a further notice to terminate if the breach is not remedied. Clause 8.9.4 goes on to allow termination for repeated breaches.
The Supreme Court reinstated the early Technology and Construction Court (TCC) ruling that the right to terminate for a repeated breach depends on the contractor having the right to issue a further notice (i.e. if the breach exceeded 28 days). If the original breach (the subject of the Default Notice) was remedied, this right never arose. Regarding the original Court of Appeal ruling, Lord Reed said that allowing a contractor to terminate because they received two separate late payments, by a single day each, would be like using 'a sledgehammer to crack a nut'.
This approach is much more commercially minded, avoiding the 'two strikes and you’re out' scenario the CA’s ruling created, being valid termination where the employer had, ultimately, cured the breach(es).
What does the JCT Design and Build contract mean for employers and contractors?
Unlike after the Court of Appeal ruling, employers no longer need to rush to amend standard JCT contracts to avoid such a termination risk as the Court of Appeal's ruling allowed. However, it is likely that there will need to be a thorough review when the next edition of the JCT is produced - and both employers and contractors should be aware of what may be crucial changes.
Employers can breathe a bit easier in the sense of avoiding being penalised where they feel they remedied a breach. However, for contractors, it is important to be aware that this ruling could essentially allow employers to consistently continue to pay late, so long as they remedy a breach within the 28 days allowed by the Default Notice. If an employer pays late again, an earlier default cannot be relied upon unless it previously matured into a termination right. This therefore limits a contractor’s ability to rely further on clause 8.9.4.
What action can contractors and employers take to remain compliant?
Contractors should be mindful of the need to amend their JCT contracts to ensure they still have the termination rights they need to rely on in such scenarios as late payment breaches.
As is always the case, employers should continue to ensure they are aware of the JCT payment mechanisms, and have in place an organised and diligent payment system - regardless of the Supreme Court reducing this termination risk.
For all parties, this should be seen as a commercially beneficial decision, allowing clearer understanding and application of termination mechanisms under the JCT.
Looking to prepare and need a helping hand?
Get in touch and let our Construction specialists take it from here.
Meet your Construction experts.
Please be advised that this is an update which we think may be of general interest to our wider client base. The insights are not intended to be exhaustive or targeted at specific sectors as such, and whilst we naturally take every care in putting our articles together, they should not be considered a substitute for obtaining proper legal advice on key issues which your business may face.