Expert Witness Journal Issue 68 August 2026 - Flipbook - Page 76
late payment—made just within the remedy period—
prevented the right to terminate from coming into
existence.
For employers
The judgment avoids a scenario in which two late
payments, perhaps caused by administrative error,
could result in termination—a risk described by Lord
Burrows as “a sledgehammer to crack a nut”.
As a result:
•
The original 1st Notice was exhausted once the
default was remedied.
•
It could not be relied upon to support a later
termination under clause 8.9.4.
•
Employers
are
therefore
protected
from
disproportionately severe consequences for isolated
or remedied breaches.
Providence should have served a new 1st Notice
when the second non‑payment occurred and
waited for the contractual remedy period to
expire.
Can parties agree something di昀昀erent?
Yes. The judgment turns on the standard JCT
wording, but parties remain free to amend clause
8.9 where commercial considerations require a
di昀昀erent balance.
Even though the second non‑payment was the same
type of default, it did not revive rights that had been
extinguished when the employer remedied the 昀椀rst
breach in time.
Potential amendments include:
•
Why clause 8.9.4 exists
•
Much of the argument in the case concerned the
purpose of clause 8.9.4. The court clari昀椀ed that the
provision is designed for a narrower situation:
•
•
•
where the employer has not remedied the
default identi昀椀ed in the 1st Notice,
Extending or deleting the 21‑day limit for
serving the 2nd Notice under clause 8.9.3.
Allowing termination for repeated defaults
regardless of whether the earlier breach was
remedied within the notice period.
Setting shorter cure periods for particular
defaults, especially non‑payment.
In sectors where cash昀氀ow is critical, giving
contractors stronger protection against repeated
late payment may be both commercially justi昀椀ed
and mutually bene昀椀cial.
but the contractor has, for its own reasons (for
example ongoing negotiations), not served the
2nd Notice within the 21‑day period allowed by
clause 8.9.3.
Conclusion
In such circumstances, if the employer repeats the
same default, clause 8.9.4 prevents the employer
gaining a second opportunity to remedy the breach.
The Supreme Court’s decision restores the orthodox
understanding of clause 8.9: the two‑stage process
must be followed each time a default is remedied
within the notice period. Clause 8.9.4 provides a
useful shortcut only in limited circumstances where
the right to terminate has already arisen but has not
been exercised in time.
However, where the initial default has been remedied
in time, the “gateway” to clause 8.9.4 never opens.
Practical consequences
For contractors
Parties should consider whether the standard JCT
wording re昀氀ects their commercial risk pro昀椀le—
particularly in relation to payment obligations and
cash昀氀ow—and amend it where necessary.
The decision means that where an employer
remedies a late payment within the clause 8.9.3
period, the contractor must restart the two‑notice
process for each subsequent late payment.
This may have commercial consequences:
•
•
•
The employer can—intentionally or otherwise—
stretch payment cycles without risking
immediate termination.
Adjudication o昀昀ers little practical remedy
during this period because the employer can
still cure the default within the notice window.
Cash昀氀ow‑sensitive contractors may feel locked
into a contract where delayed payments fall
short of what was agreed or required.
EXPERT WITNESS JOURNAL
74
AUGUST 2026
