The UK Supreme Court has provided important guidance on the interpretation of construction contracts governed by English law, in particular regarding the relevance of asymmetrical clauses and the approach to be taken when construing an industry standard form.
Asymmetrical clauses which impose more burdensome obligations on one party, or afford them lesser protections, are common in the construction industry; both in standard form contracts and in bespoke amendments negotiated to those forms.
In Providence Building Services Limited v Hexagon Housing Association Limited [2026] UKSC 1, the Supreme Court considered a termination clause that provided a contractor with different termination rights to those granted to the employer. Its judgment confirms that the courts will not use the exercise of contractual interpretation to erode the effect of asymmetrical provisions to which the parties have agreed.
Background
Hexagon Housing Association Limited (the Employer), and Providence Building Services Limited (the Contractor), entered into a contract based on the JCT Design and Build Contract 2016. Clause 8.9 entitles the Contractor to issue a notice of default if the Employer fails to make a payment on time, and to terminate the contract if that default persists for a further 28 days. If the Contractor fails to issue a notice of termination "for any reason" after issuing a notice of default, but the Employer "repeats a specified default" (i.e., fails to make another payment on time), clause 8.9 then provides that the Contractor is entitled to terminate.
The Employer failed to make a payment on time and the Contractor issued a notice of default. The Employer then made the late payment within 28 days, so the Contractor's right to terminate in respect of that late payment did not crystallise. When the Employer subsequently failed to make another payment on time, the Contractor issued a notice purporting to terminate the contract without first issuing a notice of default. The Employer argued that the Contractor's termination was invalid on the grounds that the Contractor never became entitled to terminate in respect of the first late payment.
The High Court agreed with the Employer, but the Court of Appeal came to the opposite conclusion, relying on the Employer's asymmetrical termination rights under clause 8.4. Clause 8.4 is structured in a similar way to clause 8.9 but expressed in different terms. The Employer's right to terminate for repeated default is stated to arise where the Employer does not issue a notice of termination "whether as a result of the ending of any specified default or otherwise", rather than where it did not do so "for any reason" as in clause 8.9. So even if the Contractor had cured a previously notified default before any right to terminate could arise, the relevant provision expressly provides that in the event of a repeated default the Employer will be entitled to terminate without issuing a further notice of default.
The Court of Appeal held that the similarities between clauses 8.4 and 8.9 were sufficient to require that these different words in each clause should be given the same meaning. As a result, the Contractor would also be entitled to terminate for repeated late payment without the requirement for a further notice of default, even if its right to terminate in respect of the previous late payment had not crystallised.
The Supreme Court
The Employer appealed to the Supreme Court, which reversed the Court of Appeal's decision. The opening words of clause 8.9.4, describing the circumstances in which the Contractor would be entitled to terminate, read "if the Contractor for any reason does not give [notice of termination] but … the Employer repeats a [default specified in a notice of default]". The Supreme Court held that the reference to the previous notice of termination indicated that the Contractor must have been entitled to issue such a notice, before any right to terminate for a repeated default could arise. If this were not required, the reference to the previous notice of termination would be meaningless, and the clause would simply have begun "if the Employer repeats a [default specified in a notice of default". The clause permitting the Contractor to issue a notice of termination was, therefore, a "gateway" to the clause entitling it to terminate for repeated default.
The Supreme Court also considered that the Court of Appeal's reliance on clause 8.4 (the Employer's termination rights) was "misplaced" because:
(i) there was no reason why termination rights between an employer and a contractor should necessarily be symmetrical, noting the relevant contractual obligations are very different;
(ii) the clauses in this case were clearly asymmetrical – for example, they provided different periods for curing default, and different defaults that would trigger the termination process; and
(iii) clauses 8.4 and 8.9 used different words, so it would be surprising if they had the same meaning, especially since this asymmetry was the carefully considered product of work by construction professionals and lawyers.
The court also made some observations regarding the principles applicable to the interpretation of industry standard form contracts, such as those used in the construction sector. Like any other contract, the meaning of a standard form is to be ascertained based on the objective intentions of the parties. However, subject to any bespoke amendments, it can generally be taken that the parties' objective intentions are for their rights and obligations to be "consistent with those of other parties using the same form", and are likely to "reflect the objective intentions" of its authors.
The court also confirmed that explanatory notes to a contract could be admissible evidence as an aid to interpretation, as could past court decisions and practice in relation to clauses in an earlier version of the standard form. However, it would only be appropriate to infer meaning from updates to industry-wide standard form contracts in limited circumstances, such as where the change was in response to the effects of a court decision, a change in legislation, or a widely publicised event. Otherwise "archaeology of the forms" was to be avoided.
Comment
Given its wide use in the construction industry, the Supreme Court's clarification of the meaning of the termination provisions in the JCT Design and Build Contract would be notable on its own, especially as the provisions considered appear in other contracts in the JCT suite and are included in the 2024 updates. The decision will be particularly reassuring for employers under those contracts, whose margin for error in respect of late payments would have been precariously thin had the Court of Appeal's decision stood. However, the decision has wider relevance for any party to a construction contract governed by English law.
First, it clarifies that where the contractual wording is unclear, the English courts will not infer similar meanings from provisions that were plainly intended to be asymmetrical. The decision brings clarity for both employers and contractors, confirming that English law will respect the parties' decision to provide for asymmetrical rights and obligations, whether included in a standard form or drafted specifically by the parties. Where the meaning of one of those asymmetrical clauses is ambiguous, the courts will not assume that a clause should be given the same meaning as its counterpart. This may be relevant, for example, to users of the 1999 FIDIC suite of standard forms, which make notably asymmetrical provision in respect of contractor claims (under sub-clause 20.1) and employer claims (under sub-clause 2.5), and which are commonly amended by the parties.
Second, it provides useful guidance on the interpretation of standard forms generally under English law. While the objective intention of the parties remains the guiding principle, the court emphasised that standard forms will usually be interpreted in a consistent way, regardless of the particular characteristics of the parties involved, unless they have included bespoke amendments. The reference to the objective intentions of those who authored the standard form is also of interest, and may indicate that particular weight will be given to any guidance those authors might publish as to the intended meaning of their standard form.
Guy Appleby (Trainee Solicitor, White & Case, London) co-authored this publication.
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