Termination Rights under JCT Contracts: Supreme Court Provides Clarity in Providence v Hexagon

The UK Supreme Court has resolved a critical question affecting construction projects nationwide. In Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1, the Court unanimously confirmed that contractors using the JCT Design and Build Contract cannot immediately terminate for repeated payment defaults unless the first default remained uncured beyond the contractual cure period. The JCT Design and Build Contract is the UK's most commonly used standard form construction contract, under which contractors take responsibility for both design and construction. This decision applies equally to the JCT 2024 edition, which retains identical termination provisions.

Background

Hexagon Housing Association (“Hexagon”) engaged Providence Building Services (“Providence”) under a JCT Design and Build Contract 2016 for construction works in London. The contract had an express termination regime whereby a specified default notice could be served for non-payment (clause 8.9.1).If the default continued for 28 days, a termination right accrued (clause 8.9.3), and, if no termination notice was then given, a later repetition of the same default could trigger immediate termination (clause 8.9.4).

In December 2022, Hexagon made an interim payment fourteen days late. Providence served a specified default notice under clause 8.9.1, but Hexagon paid within the 28-day cure period required by clause 8.9.3, so no right to terminate arose. In May 2023, Hexagon again failed to pay on time. Providence served a termination notice under clause 8.9.4, asserting that the May non-payment was a repetition of the earlier specified default. Hexagon disputed this, arguing that clause 8.9.4 could not be engaged because the December default had been cured within 28 days, meaning no termination right had ever accrued under clause 8.9.3.

The High Court agreed with Hexagon, but the Court of Appeal reversed that decision, finding that the broad phrase “for any reason” in clause 8.9.4 permitted immediate termination for repeated defaults regardless of whether the first default had continued long enough to create a termination right. Hexagon appealed to the Supreme Court.

The Supreme Court’s Ruling

The Supreme Court unanimously overturned the Court of Appeal, finding that the natural reading of clause 8.9.4 makes it dependent upon clause 8.9.3. The opening phrase “[if] the Contractor for any reason does not give the further notice referred to in clause 8.9.3” contemplates that a termination right under clause 8.9.3 must have existed but was not exercised. Without this prerequisite, the opening words would be redundant; the Court described clause 8.9.3 as a “gateway” that must be passed through before clause 8.9.4 becomes available.

The Court also found that Providence’s interpretation would produce extreme results, allowing a contractor to terminate the entire contract simply because two payments were each one day late, even if promptly corrected. Hexagon’s interpretation ensures that immediate termination for repeated defaults is reserved for situations where an earlier default was serious enough to persist beyond the 28-day cure period.

The Supreme Court also rejected Providence’s argument that the contractor’s termination rights in clause 8.9.4 should mirror the employer’s termination rights in clause 8.4.3. The Court found no basis for assuming symmetry between parties with fundamentally different contractual obligations. The difference in language between the clauses must reflect a deliberate difference in meaning.

Why This Matters

The decision means that employers using standard JCT forms are protected from contract termination arising from payment delays that are corrected within the contractual timeframe. The Court of Appeal’s approach would have exposed employers to termination risk from relatively minor repeated delays. That risk has now been eliminated where defaults are cured within the specified period.

Before invoking clause 8.9.4 for a repeated default, contractors must be able to demonstrate that a previous instance of the same type of default continued uncured beyond the relevant cure period. The consequences of getting this wrong are severe, with an invalid premature termination likely to constitute a repudiatory breach of contract.

The Supreme Court confirmed that the objective approach to contractual interpretation applies equally to industry-wide standard forms, while recognising that parties adopting such forms are generally taken to intend consistency of interpretation across users. This has significance beyond construction contexts, with the judgment building on its comparable reasoning in the 2024 UKSC Tesco Stores decision concerning collective bargaining terms in employment contracts.

For any organisation using standard form agreements, the practical takeaway is that the words in your contract will be read objectively and in context, so investing time in getting them right at the drafting stage is crucial.

The Supreme Court’s decision restores balance and clarity to JCT termination provisions, ensuring that the contractual machinery operates as the drafters intended while protecting both parties from disproportionate outcomes.

The full Supreme Court Judgment can be accessed here.

Note: This is a general summary of an evolving field of law, and is made available for general discussion purposes only between CANDEY and its clients and prospective clients. This memorandum does not constitute legal advice and must not be relied on as such. It should also not be cited as legal or academic authority

CANDEY is a boutique litigation law firm that has extensive experience in complex contractual disputes. Leo Nabarro annd Kate Marlow are currently acting for a global brand in a JCT dispute to which this decision is relevant. We can guide clients through all aspects of contractual litigation, including termination issues under standard form contracts, and help assess the procedural and substantive challenges involved.