Can my main contractor terminate my subcontract?
Yes, but only on the grounds and by the steps your subcontract sets out, or where the law allows it for a serious breach.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
The standard JCT subcontracts list defaults such as suspending the works without reasonable cause and not removing defective work when directed. Another is failing to proceed regularly and diligently, which broadly means not keeping the work moving steadily with proper resources. They require a notice naming the default, a period to end it, then a further notice to terminate. NEC subcontracts set out their own reasons and steps. Amended and bespoke subcontracts vary, and some add a right to end the subcontract without any default, with its own payment rules. The notices have to be served exactly as your subcontract says, and a termination that skips the steps may itself be a breach. So a default notice is the moment to act. Whether a particular termination is valid is a question for your solicitor. Answering a default notice in writing, inside its period, is something you can do straight away.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor gets a notice saying it is failing to proceed regularly and diligently. The main contractor may terminate if the default continues for 10 days.
What happens
- The date the notice arrived is fixed, and the 10 days are counted from it.
- A written reply goes within the period, with the labour returns and the dates areas were released to the subcontractor.
- The notice and the reply go to the solicitor the same day, with the question of whether the notice is valid.
The outcome
Before the period ends, the file holds the subcontractor's answer beside the notice, whatever the solicitor's view of its validity turns out to be.
Setting up the notices, replies and records that keep a default case from building is our Termination Prevention service.