Termination in the construction context
I am posting my revision note for MSc construction law and dispute resolution. The contents are from Professor Anthony Laver's lecture note, Hudson, and Keating.
Summary
Termination can be categorized into (a) termination for cause/breach and (b) termination for convenience. Termination for breach can be exercised only by the existence of repudiatory breach including (a) breach of a condition (b) fundamental breach of an innominate term (c) cumulative effects of breaches. In order to amount to repudiation (or repudiatory breach), a breach must go to the root of the contract. The exercise of termination for convenience is subject to control in some jurisdictions such as the US and Australia, in which the termination must not be in bad faith.
When a contract is terminated both parties are discharged from the further performance of the contract, but some rights and obligations remain or survive. Termination, unlike rescission, does not render the contract void or voidable.
In the construction context, defects may not be a ground for termination by the theory of ‘temporary disconformity’ in Hong Kong and New Zealand or test for the seriousness of the breach whether the breach is depriving the other party of substantially the whole benefit in the UK. The contractor may also be entitled to fix defects under the contract, or as part of employer’s duty to mitigate. Delay of the project may not be the ground for termination when time is not of the essence. Delayed payment may not be the base for termination. However, it is worth noting that s.109 and s. 112 of the HGCRA 1996 provide the statutory rights of stage payments and suspension when payment is delayed, respectively. Employment of additional contractors by the employer can be ground for the termination by the contractor. Under-certification by the architect is not likely to be a ground for termination. The contractor’s simple remedy is to go to arbitration or adjudication and have the certificates corrected.
Parties to modern construction contracts typically make express provision for (a) the scope of the entitlement; and (b) the procedure, including any compensation mechanism. Use of the contractual mechanism of termination does not preclude the common law mechanism.
The exercise of termination will normally attract significant entitlement to compensation for the contractor, either under the contract or the general law, depending on jurisdiction. “Termination of a contract is always a serious step to take because it will almost inevitably have significant consequences, both practical and legal, for the parties.”
1. A breach of contract
A breach of contract is a failure by a party to fulfil its contractual promise.[1] Treitel states “a breach of contract is committed when a party without lawful excuse (a) fails or (b) refuses to perform what is due from them under the contract or (c) performs defectively or (d) incapacitates themselves from performing.”[2] A breach of contract may be committed irrespective of fault or negligence. Therefore, innocent party, in general, does not need to prove there is fault or negligence by the other party who breaches the contract. Every breach of contract entitles the innocent party to recover damages for the loss suffered as consequence of the breach. However, any breach does not necessarily entitle the innocent party to terminate a contract.
2. Definition of repudiation[3]
The word “repudiation” has several meanings, but it is the most convenient term to describe circumstances where:
“[o]ne party so acts or so expresses himself as to show that he does not mean to accept the obligations of a contract any further.”
Such a repudiation, if accepted by the innocent party, releases both parties from further performance (in other words, a contract is terminated).
3. Repudiation or Repudiatory breach[4]
There are two circumstances in which breach of contract by one party entitles the innocent party to terminate (put an end) to all remaining primary obligations of both parties. These (repudiatory breaches) are:
(a) a breach of condition: where the contracting parties have agreed, whether by express words or implication of law that any breach of the contractual term in question shall entitle the other party to elect to put an end to all remaining primary obligations of both parties, i.e. where there is a breach of condition; and
(b) a fundamental breach: where the event resulting from the breach of contract has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties that they should obtain from the contract, i.e. where there is a fundamental breach.
3.1. A breach of condition[5]
A breach of conditions gives rise to the innocent party to terminate a contract. A condition is a particular primary (or core) obligation of a contract which the parties have agreed that any breach of a condition by one party should entitle the other party to have a right to terminate a contract regardless of the seriousness of the breach. It is not an easy matter to decide what constitutes a condition. Therefore, certain expressions may be used to transform a certain obligation to a condition such as ‘of the essence’, or ‘condition precedents’[6] However, the mere use of these expressions will not by itself be conclusive. The contract as a whole should be examined to see that it is consistent with the parties’ intention.
3.2. A fundamental breach[7]
Traditionally, a term of a contract was classified as a condition or a warranty. A condition is the core purpose of the contact, while a warranty is term collateral to the main purpose of the contract. The importance of the distinction between a condition and a warranty is that the breach of a “condition” normally entitles the innocent party to terminate the contract and claim damages; while the breach of a “warranty” normally entitles the innocent party to only claim damages.
The movement away from traditional classification of warranties and conditions was found in Hong Kong Fir Shipping v Kawasaki[8] (1961), where the concept of the ‘innominate’ term was introduced. In addition, the right to terminate as to an innominate term depended on a consideration of the seriousness of the term, breach and consequences. Intermediate terms are terms capable of operating as conditions or warranties according to the gravity (seriousness) of the breach. In construction contracts, most terms, (which are not conditions) are suggested to be intermediate. Having said that, when the gravity of the breach of an intermediate term has the effect of depriving the other party of substantially the whole benefit which it was the intention of the parties, it can be regarded as a fundamental breach giving rise to an entitlement of termination. Simply put, in order to amount to repudiation (or repudiatory breach), a breach must go to the root of the contract.
3.3. Ongoing breaches or the cumulative effect of breaches
As discussed above, repudiatory breaches are limited to ‘a fundamental breach of innominate terms’ or a breach of conditions. It is worth noting that the court allowed an innocent party to transform ongoing breaches (but a non-fundamental failure of performance) into repudiation, by giving reasonable notice of a requirement for the other party to rectify the failure. Non-compliance with the term after such notice may amount to repudiation[9]. In construction contracts, the cumulative effect of breaches in the long-term contract can be repudiation and may justify termination. [10]
3.4. Party’s intention and notice
Party’s intention is an important factor in deciding whether the action or inaction is repudiation.[11] It is distinguishable from the interpretation of the objective intention of parties when entering into a contract, therefore, the intention of the party is a matter of fact. In Gulf Agri v Aston Agro[12], Aikens J. stated that:
“What, objectively, is the intention of the party who has done something that which is said to be a repudiation of the contract? Is it (objectively) that party’s intention to abandon or repudiate the contract or not? That is a question to be determined by the fact-finding tribunal from all the evidence available.”
However, repudiatory breaches are not always dependent on intention. A term as to time could be made ‘of the essence’ by reasonable notice. It can also be stipulated in the contract.[13]
3.5. Can delayed payment be repudiation?
A particular difficulty arises over delayed payments since the general principle is that time is not of the essence for payment unless stipulated to be so. In order for withholding of due payment to constitute a repudiatory breach, the case laws have suggested that (a) it must amount to an unjustified refusal to pay or (b) it must be a manifestation of an intention never to pay, or (c) to impose payment terms against the original contract.
It should be noted that a refusal to pay may be justified by a right of set-off. Where a right of set-off is relied upon as grounds for non-payment, it is not necessary that the amount of the set-off should be accurate, but it must be a reasonable assessment in good faith. It is notable that the HGCRA 1996 s112 stipulates the right to suspend when payment is delayed.
3.6. Anticipatory breach
Anticipatory breaches occur before performance is due. In essence, an anticipatory breach is where one party makes the other aware of their intention not to perform their contractual obligations. This may be explicitly or implied by conduct. The innocent party may either accept the repudiation and sue immediately or wait for the contractual date of performance and sue for breach (if it occurs) in the usual way.
3.7. The lawful excuse for non-performance
A further necessary ingredient of repudiation is that the refusal or failure to perform contractual obligations should be without lawful excuse. Some situations may provide the legitimate ground for non-performance; i.e. statutory right to suspend, frustration or other vitiating factors. In the construction context, it is worth noting that the right to suspend work under s112 of the HGCRA 1996 would operate as a lawful excuse.
3.8. Repudiatory breach in construction cases
In the context of construction cases, it has been said that there are three categories of case involving a repudiatory breach. In Rice (t/a Garden Guardian) v Great Yarmouth Borough Council[14] it was said that:
“ (1) those cases in which the parties have agreed either that the term is so important that any breach will justify termination or that the particular breach is so important that it will justify termination; (2) those contractors who simply walk away from their obligations thus clearly indicating an intention no longer to be bound; and (3) those cases in which the cumulative effect of the breaches which have taken place is sufficiently serious to justify the innocent party in bringing the contract to a premature end.”
4. Termination or affirmation
Where a breach of a condition has occurred, the innocent party may
(a) accept the breach, therefore, terminate the contract, or
(b) affirm the contract and continue with the contract
4.1. Affirmation of contract[15]
Repudiation by one party standing alone does not terminate the contract. Termination is done by acceptance of the repudiation or repudiatory breach. Where the innocent party does not accept the repudiation or repudiatory breaches (in other words, does not terminate the contract), he is said to ‘affirm the contract.’
A decision to affirm is generally irrevocable. The innocent party is allowed a period to decide whether to terminate or affirm. Obligations and rights remain on both sides after the affirmation.
In order to affirm, there are certain requirements. (a) three should be ‘legitimate interest’ requirement and (b) affirming party must not render the other party in breach. There are some risks of affirmation. an affirming party may breach contract themselves, or an intervening frustration event after affirming may deny a valid claim for the repudiatory breach.
5. Effects of Termination
The following statement by Dixon J in the Canadian case, McDonald v Dennys Lascelles[16] (1933), has repeatedly been approved in the House of Lords as the correct starting point as to effects of termination.
“When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding on him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.”
5.1. Primary obligations performed
Regarding the primary obligations already performed, any rights and obligations which have already accrued (such as instalment payments for work done) are not affected by the termination. Termination for repudiatory breach (a breach of a condition or a fundamental breach) is equal to treating the contract as repudiated (to the end). Termination, unlike rescission, does not render the contract void or voidable. Termination excuses all parties from further performance of their primary obligations but some duties survive, including the duty to pay damages (secondary obligations) for a breach already committed. Termination does not require prior approval of the court, but the right to terminate may be challenged as ‘wrongful termination’ in subsequent court proceedings or at the tribunal.
5.2. Primary obligations yet to be performed
In regards future primary obligations, the general principle was stated by Lord Diplock in Photo Productions v Securicor[17], that where a contract is treated as discharged, the effect is that primary obligations about further performance are terminated. A secondary obligation is substituted in their place, by implication of law, that the party in default should pay monetary compensation to the other party for the loss sustained by him in consequence of the non-performance of the future obligations.
Provisions for arbitration within a contract survive termination (the instance is referred to as ‘separability of arbitration clause’).[18] Obligations such as a duty to maintain confidentiality may survive repudiation of a contract. Contracts can be drafted to clarify the position whether a certain provision survive termination, e.g. whether confidentiality or arbitration clauses survive termination.
6. Termination for convenience[19]
A 'termination for convenience' clause[20] allows one party to terminate the contract without cause. Although these clauses are increasingly being used to provide flexibility in construction contracts, this is a departure from the traditional approach to ‘termination for cause’ whereby a contract could only be terminated for cause (default) as discussed above. In the construction context, “it permits an employer to terminate the contract at any time and for any reason, whether financial, political or otherwise, where the contractor is not in default.”[21]A ‘termination for convenience’ clause may not render a contract void (the freedom of contract is not easily undermined). However, there is concern that a party (in construction context an employer) may abuse its broad power and seriously undermine the promises made under the contract. An implied obligation of good faith may limit the use of a ‘termination for convenience clause’ to prevent such a result. However, case laws from the US and Australia suggest that good faith is not a very stringent limit.
6.1. How power of termination for convenience is exercised
Anthony Lavers have researched the limitations of ‘termination for convenience’ in number of jurisdictions questioning that “Does the Employer normally have unlimited powers to terminate or vary the contract without good reason?” [22] The summary is as follows:
(Netherlands) Yes. Article 7:764 of the Dutch Civil Code.
(Austria) Yes, subject to compensating the Contractor.
(Germany) Yes, subject to compensating the Contractor if he suffers adverse financial consequences.
(Sweden) Yes, subject to compensation.
(Sweden) Yes, subject to compensation.
(France) No. Article 1134 of the French Civil Code.
(Greece) No. Article 700 of the Greek Civil Code authorises the employer to terminate a contract in a non-abusive manner and not contrary to the principles of good faith.
(England/Wales) No, subject to genuinely agreed contract provisions.
7. Express provisions in the contract for termination
It is not uncommon for contracts to contain express provisions for termination, either for (a) unsatisfactory performance by one party, or (b) insolvency or (c) simply by the giving of notice. Traditionally such provisions have been interpreted strictly against the party seeking to rely on them, but the recent cases show a slight relaxation in favour of business common sense[23]. In Rice (t/a Garden Guardian) v Great Yarmouth Borough Council[24] it was said after examining the Hong Kong Fir shipping that:
'In the context of a contract intended to last for four years, involving substantial investment or at least substantial undertaking of financial obligations by one party and involving a myriad of obligations of differing importance and varying frequency, I have no hesitation in holding that the common sense interpretation should be imposed upon the strict words of the contract and that a repudiatory breach or an accumulation of breaches that as a whole can properly be described as repudiatory are a precondition to termination pursuant to clause 23.2.1. (…) In the case of contracts of multiple, separate obligations, such as those under consideration in this case it seems to me, again invoking the doctrines of commercial common sense, that a breach which deprived the innocent party of substantially the whole benefit of substantially any aspect of the contract should be regarded as repudiatory.'
However, it should be noted that express provisions for termination often cause difficulty since procedure must be in compliance with great precision.
In Stocznia Gdynia v Gearbulk Holdings[25], where it was held that use of the contractual mechanism of termination did not preclude the common law mechanism, and that notice under the contractual mechanism was effective under the general law as acceptance of a repudiation. Moore-Bick LJ stated that:
“In this case I would go further. In my view it is wrong to treat the right to terminate in accordance with the terms of the contract as different in substance from the right to treat the contract as discharged by reason of repudiation at common law. In those cases where the contract gives a right of termination, they are in effect one and the same.”
8. Termination provisions in the standard form of contract
8.1 JCT
Clause 8.4
“If the Contractor continues a specified default for 14 days from receipt of the notice (default notice) under clause 8.4.1, the Employer may on, or within 21 days from, the expiry of that 14 day period by a further notice to the Contractor terminate the Contractor’s employment under this Contract.”
Clause 8.5
“If the Contractor is Insolvent, the Employer may at any time by notice to the Contractor terminate the Contractor’s employment under this Contract.”
Clause 8.6
“The Employer shall be entitled by notice to the Contractor to terminate the Contractor’s employment…if…the Contractor or any person employed by him or acting on his behalf shall have committed an offence under the Prevention of Corruption Acts…”
8.2 FIDIC
Sub-clause15.2.2
“Unless the Contractor remedies the matter described in a Notice given under Sub Clause 15.2.1 [Notice] within 14 days of receiving the Notice, the Employer may, by giving a second Notice to the Contractor immediately terminate the Contract. The date of termination shall be the date the Contractor receives this second Notice. However, in the case of sub-paragraph (g) or (h) of Sub-Clause 15.2.1 [Notice], the Employer may by giving a Notice under Sub-Clause 15.2.1 immediately terminate the Contract and the date of termination shall be the date the Contractor receives this Notice.”
Sub-Clause15.2.1
“(g) becomes bankrupt or insolvent, goes into liquidation
(h) is found, based on reasonable evidence, to have engaged in corrupt, fraudulent, collusive or coercive practice at any time…”
Sub-clause15.3
“After termination of the Contract under Sub-Clause 15.2 [Termination for Contractor’s Default], the Engineer shall proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine the value of the Permanent Works, Goods and Contractor’s Documents and any other sums due to the Contractor for work executed in accordance with the Contract….”
Sub-clause 15.5 Termination for Employer’s Convenience
“The Employer shall be entitled to terminate the Contract, at any time for the Employer’s convenience, by giving a Notice of such termination to the Contractor, (which Notice shall state that it is given under this Sub-Clause 15.5). …Termination under this Sub-Clause shall take effect 28 days after the later of the dates on which the Contractor receives this Notice or the Employer returns the Performance Security. Unless and until the Contractor has received payment of the amount due under Sub-Clause 15.6 [Valuation after Termination for Employer’s Convenience], the Employer shall not execute (any part of) the Works or arrange for (any part of) the Works to be executed by any other entities.”
8.3 NEC 4
Clause 90.1
“If either party wishes to terminate the Contractor’s obligation to Provide the Works it notifies the Project Manager and the other Party giving details of the reason for terminating.”
Clause 90.2
Termination for Reasons: “A party may terminate for a reason identified in the Termination Table. The procedures followed and the amounts due on termination are in accordance with the Termination Table.”
Clause X11.1
: “The Client may terminate the Contractor’s obligation to Provide the Works for a reason not identified in the Termination Table by notifying the Project Manager and the Contractor.
9. Repudiation by contractor[26]
9.1. Refusal or abandonment.
An absolute refusal to carry out the work or an abandonment of the work before it is substantially completed, without any lawful excuse, is a repudiation.[27]
9.2 Defects.
9.2.1. Temporary disconformity theory in England and Wales and other jurisdictions[28]
The temporary disconformity theory is that a contractor who carries out defective work will not be in actual breach of contract until completion and handover. The “temporary disconformity” theory owes its origin to one passage in a dissenting speech of Lord Diplock in the House of Lords.
“Upon a legalistic analysis it might be argued that temporary disconformity of any part of the works with the requirements of the contract even though remedied before the end of the agreed construction period constituted a breach of contract for which nominal damages would be recoverable. I do not think that makes business sense. Provided that the contractor puts it right timeously I do not think that the parties intended that any temporary disconformity should of itself amount to a breach of contract by the contractor.”[29]
In Hong Kong Lord Diplock’s approach has been cited with approval where the question was whether defective work justified termination of the contract.[30] The court was of the view that importance of the honeycombing had been exaggerated, and that to suggest it could give rise either to termination or an allegation that it prevented a floor from being completed was unreal. The honeycombing had to be put right before finishes were applied to the walls, and the court was satisfied that it would have been put right.
Similarly, in New Zealand, a homeowner sought to terminate the contract with his contractor on the basis that the incomplete works did not comply with building by-laws, the contract and the specification, and was unsafe. At first instance, it was held that it was not open to the homeowner to terminate for breach of an essential stipulation of structural safety, as it was still possible that the contractor would complete the work, and the termination was premature. The Court of Appeal held that the judge had decided no more than that the breach by the Contractor was not an essential breach permitting termination, and found particular significance in the fact that the defects could be remedied inexpensively. The decision is based on the theory of temporary disconformity.[31]
However, temporary disconformity theory has been rejected by English courts. But, if and to the extent that the temporary disconformity theory remains part of the law, it may make it important to include express provisions entitling the Employer to order the removal of unsatisfactory work before practical completion.
9.2.2. Recent decisions[32] in the UK
In general, a breach consisting of mere negligent omissions or bad workmanship where the work is substantially completed does not go to the root of the contract in the ordinary lump-sum contract, and is not therefore a repudiation. However, there is a repudiation where, having regard to the construction of the contract and all the facts and circumstances, the gravity of the breaches is such as to show that the contractor does not intend to or cannot substantially perform its obligations under the contract. In Sutcliffe v Chippendale and Edmondson[33], it was held that the contractor’s:
“…manifest inability to comply with the completion date requirements, the nature and number of complaints from subcontractors and [the architect’s] own admission that in May and June the quality of work was deteriorating and the number of defects was multiplying, many of which he had tried unsuccessfully to have put right, all point to the truth of the claimant’s expressed view that the contractors had neither the ability, competence or the will by this time to complete the work in the manner required by the contract.”
In Rice (t/a Garden Guardian) v Great Yarmouth Borough Council[34]the court held that an accumulation of breaches may, therefore, be relevant, not for its own sake, but also for what it shows about the future. Such breaches may give rise to an inference that the contractor will continue to deliver a substandard performance. However (based on the fact of the case) the Court of Appeal held that the judge had correctly concluded that the Council had not had the right to terminate the contract after assessing the significance of the breaches found against the background of the contract as a whole and the circumstances of the case, including the role played by the Council in requiring the contractor to redeploy workmen.
The contractor may also be entitled to fix defects under the Contract or as part of employer’s duty to mitigate In Oksana Mul v Hutton Construction[35], practical completion was issued despite substantial snagging list. new contractor was brought in to carry out remedial works and original contractor sued for £1 million. Akenhead J following Woodlands Oak v Conwell[36] held as a preliminary issue that this could constitute a failure to mitigate unless it was reasonable in all the circumstances not to use the original contractor.
9.3. Delay[37]
Delay on the part of the contractor where time is not of the essence of the contract does not amount to a repudiation unless it is such as to show that it will not, or cannot, carry out the contract, or that the delay is such as to deprive the innocent party of substantially the whole benefit of the contract. Where time is of the essence either by the terms of the contract, or as a result of a notice making it of the essence, and the contractor fails to complete to time, the employer is entitled to treat the contract as at an end and to dismiss the contractor from the site.
In Bedfordshire CC v Fitzpatrick Contracts Ltd[38] contractors failed to start work on 1 June. On 11 June, the employers wrote stating that unless the contractors confirmed that they were prepared to assume their obligations under the contract by 15 June that would be treated as a repudiatory breach. The employers purported to accept the contractors’ failure to commence work on that date as a repudiatory breach. It was held that the period of notice, in the circumstances of that case, was not reasonable to make time of the essence.
In any event, time for completion for the purposes of determining whether a contractor is proceeding regularly and diligently is the objective time for completion, taking into account any appropriate extensions of time to which the contractor is properly entitled.
9.4. Other causes
It is a question in each case whether other breaches of contract go to the root of the contract. For example, it has been held that sub-contracting part of the contract works, contrary to an express provision, was not a repudiation. The fact that employees of a contractor company were discovered taking drugs on site in breach of safety precautions was insufficient to amount a repudiatory breach because the contractor company took it seriously, dismissed them and did not renounce its obligations under the contract.
10. Repudiation by contractor[39]
10.1. Refusal.
An absolute refusal by the employer to carry out its part of the contract, whether made before the works commenced or while they are being carried out, is a repudiation of the contract.[40]
10.2 Rendering completion impossible.
It is, in general, a repudiation if the employer wrongfully by its own acts, and without lawful excuse, renders completion impossible.
10.3 Possession of site.
The employer repudiates the contract if it fails to give possession of the site at all, or without lawful excuse ejects the contractor from the site before completion.
10.4 Order not to complete.
A clear unjustified order not to complete the works is a repudiation.
10.5. Employment of additional contractors.
It has been held that the engagement of additional contractors to execute the same works already contracted to another contractor was a repudiatory breach.
10.6. Failure to pay instalments.
This cannot be a repudiation if there is no contractual duty to pay them. However, in most construction contracts there is a statutory obligation to make stage payments in the absence of an express agreement under s.109 of the Housing Grants, Construction and Regeneration Act 1996. Then, it is a question in each case of whether the failure to pay is a repudiation. Failure to pay one instalment out of many due under the terms of the contract is not ordinarily sufficient to amount to a repudiation. A failure to pay three instalments, where the employer did not evince an intention never to pay, was held not to be repudiatory conduct. It was held to be a repudiation where a company had only paid £10,000 out of £24,000 then due. A failure to pay is less likely to be a repudiation if it occurs towards the end of a contract.
10.7. Under-certification.
Can an employer who pays certificates issued by the architect be liable of repudiation if those certificates are substantially too low? There are difficulties in saying that it can because prima facie it is doing what the contract requires of the employer. But it has now been settled that the architect is the employer’s agent when giving their certificate.[41] It has been held that an employer cannot stand by and take advantage of its architect applying a wrong principle in certifying.[42] But it has also been held that, where there was a wide arbitration clause and where the employer had not interfered with or obstructed the issue of certificates, the employer was not obliged to pay more than the amount stated on the certificate. The contractor’s simple remedy was to go to arbitration and have the certificates corrected.[43] There is thus a narrow dividing line between cases where an employer who has paid certified amounts may be in breach of contract and cases where it may not. In principle, if there are circumstances in which it might be in breach, it could also in extreme cases be in repudiatory breach. However, it seems that this would at least require both clear knowledge by the employer that the architect was persistently under certifying and a contract without a relevant arbitration clause.
10.8. No general right to suspend work[44]
Although particular contracts may give the contractor express rights if certificates are not paid, there is no general right at common law to suspend work if payment is wrongly withheld. This is consistent with the principle that, except where there is a breach of a condition or fundamental breach of contract, breach of contract by one party does not discharge the other party from performance of its unperformed obligations. By contrast, where non-payment has been found to be repudiatory, a contractor may be entitled to suspend work as the employer cannot rely on its own breach to justify a contention that the contractor is itself in repudiatory breach. However, s.112 of the Housing Grants, Construction and Regeneration Act 1996 gives a contractor a statutory right to suspend performance of its obligations in the absence of payment in certain circumstances.
[1] Bailey 9.01
[2] Treitel, The law of contract
[3] Keating 6-086
[4] Keating 6-086
[5] Hudson 8-007
[6] Conditions precedent describes contract stipulations which must be performed or events that must occur before one or both parties become bound to perform obligations under the contract.
[7] Keating 6-096
[8] [1961] EWCA Civ 7
[9] Hong kong
[10] Rice (t/a The Garden Guardian) v Great Yarmouth [2000] All ER (D) 902
[11] (clear demonstration to commence the work does not amount to repudiation) Bedfordshire CC v Fitzpatrick Contractors
[12] [2008] 2 Lloyd's Rep. 376.
[13] Union Eagle v Golden Achievement [1997] UKPC 5
[14] [2000] All ER (D) 902
[15] Keating 6-106
[16] [1933] HCA 25
[17] [1980] AC 827
[18] Heyman v Darwins (1942) 72 Ll.L.Rep. 65
[19] See Anthony Gray (2013) Unfair Contract Terms: Termination for Convenience, 37 U.W. Austl. L. Rev. 229; Ruth Loveranes (2012) Termination for Convenience Clauses, 14 U. Notre Dame Austl. L. Rev. 103
[20] Alternative terminology: termination at will or termination at discretion
[21] FIDIC Contracts: Law and Practice, 2009
[22] Ethics in Construction Law – A review of the position in eight European countries by Anthony Lavers, International Construction Law Review, Volume 24, 2007 – Part 4
[23] Rice (t/a The Garden Guardian) v Great Yarmouth BC [2000] All ER (D) 902
[24] [2000] All ER (D) 902
[25] [2009] EWCA Civ 75
[26] Keating 6-113 to 6-121
[27] Mersey Steel & Iron Co Ltd v Naylor (1884) 9 App. Cas. 434, HL.
[28] Hudson Chapter 4.4. (3) Temporary disconformity
[29] P & M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 W.L.R. 146, 165.
[30] Eu Asia Engineering v Wing Hong Contractors
[31] Adkin v Brown [2002] NZCA 59.
[32] Keating 6-115, 6-116
[33] (1971) 18 B.L.R. 157
[34] [2000] All ER (D) 902
[35] [2014] EWHC1797 (TCC)
[36] [2011] EWCA254
[37] Keating 6-117; 6-120
[38] (1998) C.I.L.L. 1440.
[39] Keating 6-123 to 6-131
[40] Mersey Steel & Iron Co Ltd v Naylor (1884) 9 App. Cas. 434, HL.
[41] Sutcliff v Thackrah [1974] A.C. 727.HL
[42] Panamena v Frederick Leyland [1947] A.C. 428
[43] Lubenham v South Pembrokeshire DC (1986) 33 B.L.R.39, CA
[44] Keating 6-131