The UK Supreme Court in Providence v Hexagon [2026] UKSC 1 confirms that termination rights must be exercised strictly in accordance with the contract. We consider the decision and its relevance to Cyprus practice.
The UK Supreme Court's decision of 15 January 2026 in Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1 is significant for commercial and construction lawyers. Although the dispute arose under the JCT Design and Build Contract 2016, the judgment has wider relevance to termination clauses in commercial contracts, including in common law jurisdictions such as Cyprus where English authorities may be persuasive. The Court reaffirmed that termination rights must be exercised strictly in accordance with the agreed contractual mechanism and will not be expanded beyond the language used.
The dispute arose after Hexagon Housing Association made two interim payments late. After the first late payment, the contractor served a notice of default, but Hexagon remedied the breach within the contractual 28-day cure period. When a second late payment occurred, the contractor sought to terminate under the repeated specified default provision, arguing that the second breach was enough even though the first had been cured in time.
The Court of Appeal accepted that argument. It held that the repeated default provision could be triggered even where the first breach had not produced an accrued right to terminate. It reasoned that the words 'for any reason' in the relevant clause were wide enough to cover a case where no right to terminate had ever arisen, and that the contractor's termination clause should be read in the same way as the employer's termination clause, which has the same structure.
The Supreme Court unanimously disagreed. It held that the clause created a clear sequence: first, a right to terminate had to arise because a specified default remained unremedied after the cure period; only then, if that right was not exercised, could a later repeated default justify termination. Since the first late payment had been remedied in time, no right to terminate had arisen and the repeated default provision was not engaged.
The Court also rejected the Court of Appeal's reliance on the employer's clause. Unlike the contractor’s clause, the employer’s clause allows termination for a repeated default even if the earlier default was cured within the relevant period. The Court saw no reason why the parties’ termination rights should be symmetrical, given that their obligations are so different.
The judgment illustrates the Supreme Court's modern approach to contractual interpretation. Commercial common sense supported the Court’s reading of the clause, which produced a more rational and less extreme outcome. The decision reinforces that termination is a serious remedy and that courts will not infer broader termination rights merely because they may seem commercially desirable to one party.
The decision is also relevant to Cyprus practitioners. English decisions are not binding in Cyprus, but they are frequently treated as persuasive, as the common law and the principles of equity continue to apply under section 29(1)(c) of the Courts of Justice Law 1960 (Law 14/1960), save where Cypriot legislation provides otherwise. The case reminds lawyers to draft termination provisions clearly, especially where repeated breaches, cure periods or conditions precedent are involved. It also underlines the need for caution before advising that a right to terminate has arisen, as an invalid termination may itself amount to a repudiatory breach, which is exactly the position the employer took in this case.
Ultimately, Providence v Hexagon is not merely a construction law decision. It confirms that courts will enforce termination clauses according to their precise wording, not rewrite them in the name of commercial fairness. For businesses, developers, contractors and lawyers, the case is a timely reminder that careful drafting at the negotiation stage may determine whether a party can lawfully bring a contract to an end.
Disclaimer:
This post is provided for general information only and does not constitute legal advice. Specific advice should be obtained in relation to the facts and terms of any particular contract.
Article by Panagiotis Hadjimichael
