Termination under JCT Design and Build

Default (clause 8.9.1)

There are 3 employer defaults which can trigger the issue of a written notice of default by the contractor. These defaults are where the employer:

• fails to pay any interim payment to the contractor;
• fails to comply with clause 7.1 (the assignment clause); or
• fails to comply with clause 3.16 (CDM Regulations).

Suspension (clause 8.9.2)

If, following the date of possession, but prior to practical completion, the carrying out of the works has been continuously suspended for the period stated in the contract particulars (the default period is 2 months at 8.9.2 but this can be amended) by reason of any impediment, prevention or default of the employer the contractor can give the employer written notice specifying the event causing suspension.

Termination notice (clause 8.9.3)

If a default or a specified suspension event continues for 14 days from the receipt of a written notice under either clause 8.9.1 or 8.9.2, the contractor may within 21 days (10 days in 2005 version) from the expiry of that 14 day period, by way of a further written notice to the employer, terminate the contractor's obligations (clause 8.9.4).

Insolvency (clause 8.10)

If the employer is insolvent or one of the insolvency events in clause 8.1 arise, the contractor may, by giving written notice to the employer terminate the contractor's obligations under the contract. Upon the employer becoming insolvent, the contractor's obligation to carry out and complete the works will be automatically suspended (clause 8.10.3).

The employer has an obligation to notify the contractor if he or she makes any proposal, gives notice of any meeting or becomes the subject of proceedings or an appointment connected to any of the insolvency events in clause 8.1 (clause 8.10.2).