Complying with notice periods for contractual termination

The JCT suite of contracts has a two stage process for terminating for breach.  The terminating party must first serve notice requiring the breach to be remedied within a set time and, if it is not, a further notice to terminate the employment.  Strict compliance with the contractual timeframe is important.  Purporting to terminate contract where the right to do so has not accrued is itself a repudiatory breach of contract, giving the other party the right to terminate.

That is what happened in the recent case of Andrew Bellis v Sky House Construction Limited.   The Claimant (AB) served a notice of default on 1 September 2021.  AB followed this up with a purported notice of termination on 8 September 2021.  The parties fell into dispute as to the validity of the termination and the dispute was referred to adjudication.  The adjudicator found in the defendant (Sky House’s) favour.  AB issued a part 8 claim seeking to challenge this.  Whilst the court will not usually interfere with an adjudicator’s decision, this dispute concerned a narrow point of contractual interpretation that was suitable for disposal via the part 8 process.

The court had to consider whether AB had allowed a sufficient period between the first and second notices.  The contract (based on the JCT Minor Works 2016) provided at clause 6.4.1 that the Contract Administrator may give notice of default to the Contractor.  Clause 6.4.2 allowed for a further notice of termination if ‘the Contractor continues a specified default for seven days from receipt of the notice under clause 6.4.1’.

8 September is 7 days after 1 September so what was the problem?

Clause 1.4 under the heading ‘Reckoning Periods of days´ stated ‘Where under this Contract an act is required to be done within a specified period of days after or from a specified date, the period shall begin immediately after that date.  Where the period would include a day which is a Public Holiday that day shall be excluded’.  As the Judge explained, this meant that day 1 of the seven day period was 2 September and day 7 was 9 September.

As a result, the right to serve notice of termination had not accrued when the second notice was served.  In turn, the Judge agreed with the adjudicator’s finding that the purported termination by AB was unlawful.

Whilst the claim was based on the Minor Works contract, equivalent wording is used throughout the JCT suite and has wider application. The case is a reminder of the extra that is needed when serving contractual notices and the serious consequences that might otherwise result.

If you have any questions you are facing in the construction industry please contact our  construction team for advice.