Providence v Hexagon: Contract termination and JCT Design & Build

On 15 January 2026, the Supreme Court handed down judgment in Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1, following an appeal relating to the correct interpretation of a termination provision widely used across the construction industry.

The sole issue of interpretation, as agreed by the parties, was: “Can the Contractor terminate its employment under Clause 8.9.4 of the JCT Design and Build (JCT D&B) form, in a case where a right to give the further notice referred to in Clause 8.9.3 has never previously accrued?” Effectively, does Clause 8.9.4 of the JCT D&B allow termination for repeated default where an earlier default has been cured?

The Supreme Court’s decision provides certainty across the industry. It reassures parties that contract termination won’t necessarily follow repeated administrative glitches in payment cycles, where late payments are quickly corrected. It also provides helpful guidance on the correct approach to contractual interpretation generally.

Background:

The parties had entered a JCT D&B standard form (2016 edition) contract for the construction of a number of buildings in Purley, London.

On 25 November 2022, The Employer’s agent issued Payment Notice 27, requiring the Employer to pay to the Contractor £264,242.55 on or before 15 December 2022. The Employer failed to make payment by the due date prompting the Contractor to serve a notice of specified default under Clause 8.9.1 (the December Notice).

Employer paid the sum on 29 December 2022, so the specified default didn’t continue for 28 days, and it wasn’t open to the Contractor to serve notice of termination pursuant to clause 8.9.3.

On 28 April 2023, the Employer’s agent issued Payment Notice 32, requiring the Employer to pay to the Contractor £265,812.22 on or before 17 May 2023. Again, the Employer failed to pay the sum by the due date.

On 18 May 2023 the Contractor issued a notice of termination under Clause 8.9.4, referring to the December Notice and relying upon the non-payment of the sum due on 17 May 2023 as a repetition of the December specified default.

The Contractor issued proceedings to seek a declaration as to the correct interpretation of Clauses 8.9.3 and 8.9.4.

Clauses:

Clause 8.9 states:

“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; […]

The Contractor may give the Employer a notice specifying the default or defaults (a ‘specified’ default or defaults’

 [….]

3. If a specified default or a specified suspension event continues for 28 days from the days of 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 28 day period by a further notice to the Employer terminate the Contractor’s employment under this Contract.
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; […]

Then, upon or within 28 days after such repetition, the Contractor may by notice to the Employer terminate the Contractor’s employment under this Contract.”

Arguments:

The Employer argued that Clauses 8.9.3 and 8.9.4 must apply so that, before a termination notice can be validly served by the Contractor for a repetition of a specified default under 8.9.4, the Contractor must have previously accrued the right to serve a termination notice under 8.9.3. Where a specified default is cured with 28 days, no termination can immediately be served where there is a repetition of the default.

In contrast, the Contractor argued that where there has been a repetition of a specified default (and a specified default notice has been served) there is no requirement for the right to terminate to have previously accrued under 8.9.3. The Contractor was entitled to terminate under Clause 8.9.4 simply because the Employer had repeated late payment in a situation where there had been an earlier late payment and a specified default notice was served. The right to terminate was immediate upon the repetition.

The Court of Appeal had previously found for the Contractor. The Court of Appeal’s decision meant that, even where an Employer had corrected an earlier default, a future payment default could result in automatic termination. The Employer appealed to the Supreme Court.

Supreme Court judgment:

The Supreme Court allowed the appeal, holding that the Contractor was not entitled to terminate the contract. It emphasised the modern approach to contractual interpretation, based on objective intentions of the contracting parties in the relevant context, stating:

“It is not a departure from that approach to say that, where parties choose to use an industry-wide standard form, it can generally be taken that their objective intentions in the relevant context are that their respective rights and obligations should be consistent with those of other parties using the same form.”

The Supreme Court decided that the opening words of 8.9.4 meant that the Contractor must have accrued the right to terminate under Clause 8.9.3 before Clause 8.9.4 could apply. Clause 8.9.4 was determined to be “parasitic” to Clause 8.9.3. (Otherwise, its reference back to Clause 8.9.3 would be superfluous or, at least, ambiguous.) In addition, to empower a Contractor to terminate having received two payments a single day late would be using a “sledgehammer to crack a nut“.

Key takeaways for the construction industry

Providence v Hexagon now clarifies that contractual termination won’t necessarily follow repeated instalment payment default where errors are swiftly corrected and payment made.

Employers should keep payment cycles and obligations under close review, and should take urgent remedial action whenever any payment dates are missed.

Whenever any payment becomes overdue, contractors should ascertain whether any earlier receipts also remain outstanding, and then seek specialist legal advice as to the best legal route to recovery.

The case also makes clear that the established modern approach to contractual interpretation [1] should be applied to the interpretation of industry-wide standard form contracts. The Supreme Court’s judgment bears reading for its helpful explanation and particular application to the construction industry.

How we can help

Walker Morris’ Construction & Engineering team comprises both expert transactional and dispute resolution lawyers, specialising respectively in contract negotiation and project management, and in risk management and strategic dispute resolution.

Across the entirely of the built environment, from infrastructure and energy development to supporting residential developers and operators, we offer our clients a detailed and practical understanding of how contracts are negotiated and operated. We focus on key issues, helping clients to achieve their objectives as efficiently as possible. Our ‘cradle to grave approach’ means clients benefit from the same legal team providing advice from start to finish on any project.

Contact Carly Thorpe for further information or advice.

[1] The correct approach to contractual interpretation is explained in this earlier article.