UK Supreme Court reverses Court of Appeal on JCT contract termination rights, limiting contractors' ability to exit for trivial late payment

The UK Supreme Court has reversed a Court of Appeal decision concerning termination rights under JCT (Joint Contracts Tribunal) construction contracts — the standard form agreements governing the vast majority of UK building projects. The case centred on whether a contractor could terminate a JCT contract for repeated but trivial instances of late payment by an employer (the party commissioning the construction work). The Court of Appeal had previously found in favour of contractors, granting them relatively generous termination rights where employers engaged in a pattern of late payment, even if individual instances were minor. The Supreme Court has now reversed that ruling, finding in favour of employers — the companies and developers commissioning construction — and restoring a narrower reading of the contractual termination mechanism. The decision will directly affect how termination notices are drafted and contested under JCT contracts across the UK construction industry. Employers can now take some comfort that contractors cannot exploit minor payment delays as a basis for exiting a contract — a tactic that could be commercially attractive in a rising-cost environment where contractors seek to escape fixed-price obligations. The Supreme Court declined to rewrite the contractual language to favour contractors, observing that any recalibration of the balance struck by the termination clause is a matter for the JCT to consider in future editions of its standard form rather than for the courts. In the meantime, parties anticipating tight payment cycles may turn to bespoke amendments — such as shorter cure periods or tailored termination triggers — which will shape the next cycle of JCT-related drafting and the advisory work it generates.

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