Termination under JCT Design and Build

Termination under clauses 8.9 to 8.11 triggers certain consequences.

• The provisions requiring payment and release of the retention are suspended under clause 8.12.1.
• The contractor is to remove from the site any temporary buildings, plants, tools and equipment belonging to the contractor and provide copies of all the as built design documents under clause 2.37. These documents are usually not completed until the works are finished and therefore there may not be any as-built drawings upon termination.
• An account must be prepared (clause 8.12.3). If the termination is a consequence of the employers default or insolvency it is for the contractor to prepare this as soon as is reasonably practicable.
• If the termination occurs under clause 8.11 the employer makes the decision as to who prepares the final account. If the employer decides to prepare the final account then the contractor has 2 months after the date of termination to provide the employer with the necessary documents. Once the documents are received the employer has a maximum of 3 months to prepare the account. In reality the contractor will usually supply the employer with their account.
• The account is to include the following content which is listed in clause 8.12.3.1:
  • the total value of executed work and design work properly carried out;
  • any loss and/or expense (whether ascertained before or after termination);
  • the reasonable cost of the removal from the site of the contractor's temporary buildings, plant, tools and the like;
  • the cost of materials or goods ordered for the works which the contractor has paid for or is legally bound to pay for; and/or
  • any direct loss and/or damage caused to the contractor by the termination (if it was terminated by the contractor or the termination arose by virtue of a specified peril under clause 8.11.1.3 which was caused by the negligence or default of the employer).

Within 28 days of submission of the account, by either party, the amount is payable without the deduction of the retention.

The right to terminate under the contract does not preclude either party from relying on the rights and remedies available at common law (clause 8.3.1). Therefore if there is a breach which suggests there is no longer an intention to comply with a central contractual term (a repudiatory breach), for which there is no right to terminate under the contract, termination may still be possible at common law.

One of the benefits of seeking termination at common law is that it provides for a remedy of damages, which may be more substantial or appropriate than the remedy prescribed by the JCT Design and Build Contract.