Termination under JCT Design and Build

Ideally, the contractor's obligations under the JCT Design and Build will only cease to exist when both the employer and the contractor fulfil their contractual obligations. However, section 8 of the JCT Design and Build 2016 provides for circumstances in which termination of the contractor's obligations can occur prior to performance of the contract.

As a general rule, termination of the contractor's obligations should not be unreasonable or vexatious (clause 8.2.1). This was interpreted as meaning an 'ulterior motive to oppress, harass or annoy' in Reinwood Ltd v L Brown and Sons (2007).

In J.M. Hill v London Borough of Camden (1980) it was also held that termination would be unreasonable if the situation giving rise to termination was:

'accidental or purely incidental so the court could see that the contractor was taking advantage of the other side the circumstances, in which, from a business point of view; it would be totally unfair and almost smacking of sharp practice.'

Further guidance was given in John Jarvis v Rochdale Housing Association (1986) which confirmed that unreasonableness was to be judged objectively.

There are several circumstances which may trigger termination by either the employer or the contractor. Should either party decide to terminate on the basis of one of these circumstances, a termination notice will need to be served on the other party. The party issuing the termination notice must ensure that it is in writing and 'shall be delivered by hand or sent by recorded signed for or special delivery post' (clause 1.7.4, in 2011 and 8.2.3, in 2005) to ensure that it is effective.