Parties to a construction contract will be contractually obliged to follow specific procedures regarding termination of the contract in question. The recent case of Bellis v Sky House Construction Ltd  ('Bellis') illustrates the court's approach to the interpretation of such provisions, and the importance of understanding timing requirements for termination under the JCT suite of contracts generally.
Bellis v Sky House Construction Ltd
In Bellis, the Technology and Construction Court ('TCC') heard a Part 8 claim brought by the claimant to challenge an adjudicator's interpretation of specific termination provisions in the JCT Minor Works Building Contract 2016 ('JCT MW') in a previous adjudication.
The provisions under scrutiny in this case were as follows:
- Clause 6.4.1 – entitles the Employer to serve a warning notice on the Contractor specifying a default.
- Clause 6.4.2 – entitles the Employer to serve a termination notice if the specified default continues for seven days from receipt of the warning notice in clause 6.4.1.
- Clause 1.4 – if an act must be done within a specific period of days after or from a specific date, that period begins immediately after that date.
The claimant served a warning notice by email on Wednesday 1 September 2021 at 5:52pm. Following this email, a termination notice was sent on Wednesday 8 September 2021 at 7:20am.
The adjudicator, in support of the defendant's argument, concluded that the termination notice should have been served on 9 September 2021, being seven clear days after service of the warning notice, where the first day of the seven-day period was 2 September 2021, i.e. the first day after the warning notice was served.
The TCC upheld the adjudicator's interpretation of the termination provisions, ruling that the claimant's purported termination of the contract was invalid and unlawful.
Termination in JCT Contracts
Bellis proves to be instructive, not just for how the termination provisions of the JCT MW should be read, but also for understanding the strict compliance required for termination across the JCT suite of contracts. The ruling in Bellis is consistent with other cases such as Manor Co-Living v RY Construction Ltd  ('Manor') which form a general precedent for following JCT termination provisions correctly.
The JCT Standard Building Contract 2016 and JCT Design and Build Contract 2016 both include similar provisions to those assessed in Bellis. Although clause 8.4 in both building contracts provide for a 14-day period between the warning notice and termination notice, clause 1.5 shares the same requirement in relation to reckoning periods of days as per clause 1.4 of the JCT MW.
You can read more about the ruling in Manor and consequent implications on termination provisions here (https://www.birketts.co.uk/legal-update/importance-of-serving-a-termination-notice-correctly/ )
Consequences of serving an invalid termination notice
As per the TCC's decision in Bellis, an invalid contractual termination would most likely be considered a repudiatory breach of contract. In consequence, this would bring the primary obligations of both parties to an end, and therefore open the door for the innocent party to claim damages for breach of contract – which would include any lost profit.
The Birketts view
In considering whether a construction contract has been validly terminated, the courts are unlikely to afford the terminating party any room to manoeuvre outside of the exact wording of the relevant contractual terms, requiring strict compliance with termination requirements.
All parties to a construction contract should pay particular attention to the form, content and timing of any and all termination notices required by the relevant contract, as failure to comply with such provisions, particularly in regards to timing, can amount to a repudiatory breach of contract by the party that serves an invalid termination notice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.