I recently wrote about the “do’s and “don’t’s” when it comes to terminating a construction contract. Terminating a contract can have huge consequences. Furthermore, calculating time periods for termination notices in JCT contracts is not as straightforward as you might think.
A good example of the issues surrounding this is the recent case of Bellis v Sky House Construction Ltd.
The parties in this case had a JCT Minor Works Building Contract 2016 edition. The employer, Bellis, had served a warning notice on the contractor setting out a default by the contractor and giving it 7 days to rectify the default. If the default continued for 7 days from receipt of the warning notice, then the employer could serve a termination notice.
In this case, a warning notice was served on 1 September 2021. The employer then served the termination notice on 8 September 2021.
However, the issue was that Clause 1.4 of the Minor Works Contract stated that the period of time would begin immediately after the date where an act was done. When using this calculation, the termination notice could not be served until 9 September 2021, 7 clear days after service of the warning notice.
This meant that the employer had repudiated the contract. The contractor had been entitled to accept that repudiation, bringing the contract to an end and then the contractor had been successful in an adjudication to recover payment of the amount payable to it.
This case once more confirms the importance of not only reading but understanding the full effect of termination provisions and following them carefully.
Taking early legal advice on what is happening on a site and whether a contract can be terminated will often save considerable money and help avoid issues that can otherwise escalate into very substantial problems.
Good legal advice could stop a party from repudiating a contract and having to face the consequences that follow, and the costs of that will be repaid many times over.
For help in dispute resolution in construction-related matters please contact me via email at firstname.lastname@example.org or call on 01245 453813.
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