Termination of a construction contract
Produced in partnership with DAC Beachcroft

The following Construction practice note produced in partnership with DAC Beachcroft provides comprehensive and up to date legal information covering:

  • Termination of a construction contract
  • Common law termination
  • Repudiatory breach
  • Examples of repudiatory breach in construction
  • Exercise of right to rescind and loss of right to rescind (affirmation)
  • Anticipatory breach
  • Consequences of common law termination
  • Risks associated with common law termination
  • Termination pursuant to a contractual provision
  • Termination at will
  • More...

Termination of a construction contract

A construction contract may be discharged, terminated or determined in a number ways. These principally include:

  1. by performance

  2. by agreement/release

  3. as a result of a misrepresentation/fraud (see Practice Note: Misrepresentation—rescission as a remedy)

  4. frustration (see Practice Note: Discharge by frustration)

  5. at common law for 'repudiatory' breach of contract ('repudiation'), or

  6. pursuant to a contractual power to terminate the contract, for example:

    1. for breach of contract

    2. at will

    3. on insolvency

This Practice Note looks at termination of a construction contract at common law for repudiatory breach, and termination pursuant to a contractual power either for breach or at will. For guidance on termination on insolvency, see Practice Note: Termination on insolvency in construction contracts.

In relation to consultant appointments, see also Practice Note: Termination of a consultant's appointment.

Common law termination

Where one party has committed a 'repudiatory' breach of contract, the innocent party may elect to either:

  1. treat the contract as continuing but claim damages as a consequence of the breach of contract complained ('affirm' the contract), or

  2. rescind the contract and bring the contract to an end

This Practice Note considers repudiation in the context of construction contracts. For more on repudiation generally, see Practice Note: Repudiation.

Repudiatory breach

Poor performance of the contract does not automatically amount to a repudiatory breach of contract. In BSkyB v HP Enterprise, it was held that the test for

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