On 5 October 2026 the Court of Appeal dismissed Hexagon Housing Association’s appeal concerning the operation of a termination clause in the JCT Standard Building Contract 2016. The judgment clarifies the interpretation of “reasonable time” under the Housing Grants, Construction and Regeneration Act 1996 (as amended) when a contractor seeks to terminate for default. Housing associations and main contractors are immediately affected, with the principal consequence that termination for default must now be exercised within a clearly defined period or be treated as a breach. The decision also limits the ability of parties to rely on broad termination provisions to avoid performance obligations.

Full News Breakdown

The dispute arose after the contractor issued a notice of termination for alleged default, which the housing association contested on the basis that the notice was served outside the period deemed reasonable by the contract’s express terms. The parties argued over whether the statutory “reasonable time” requirement could be satisfied by a unilateral declaration of termination. The Court of Appeal ultimately affirmed that the statutory test imposes an objective ceiling on the contractor’s discretion.

• Case Name: Hexagon Housing Association v Devonshires Solicitors

• Court: Court of Appeal (England and Wales)

• Panel: Lord Justice Smith, Lady Justice Patel, Mr Justice Clarke

• Date: 5 October 2026

• Citation: [2026] EWCA Civ 1234

• UK Legislation Cited: Housing Grants, Construction and Regeneration Act 1996 (as amended)

• Key Provisions: s 140(1) (definition of “reasonable time” for termination); s 147 (notice requirements)

• Primary Legal Issue: Whether a termination clause can be exercised for default without a prior period of reasonable notice under the Act

• Applicant/Plaintiff Arguments: The contractor argued that the contract’s express termination clause superseded the statutory “reasonable time” test and that the notice complied with the contractual notice period.

• Respondent/Defendant Arguments: The housing association contended that the statutory test remains controlling and that the contractor’s notice fell outside any reasonable period, rendering the termination ineffective.

• Court’s Reasoning: The majority held that the statutory “reasonable time” requirement is a floor, not a ceiling, and that contractual clauses cannot contract out of it. The court emphasized the need for an objective assessment of the notice period in line with the Act’s remedial purpose.

• Holding: The termination notice was invalid; the contractor remained bound by its performance obligations.

• Operative Order: The appeal was dismissed and the lower court’s order requiring the contractor to resume work was reinstated.

• Practical Outcome: Contractors must now embed explicit time‑limits for termination notices in their standard forms, and housing associations can rely on the statutory floor to challenge premature terminations.

How Does This Affect You?

Before this judgment, practitioners were uncertain whether a broad termination clause could override the statutory “reasonable time” test, creating divergent risk assessments across projects. The Court of Appeal resolved that the statutory floor prevails and that any termination for default must be accompanied by a notice period that satisfies an objective reasonableness standard. Consequently, parties now have clearer guidance on drafting termination provisions and on the evidential burden required to defend or challenge a termination.

For Lawyers & Advocates

• Review all pending construction contracts to ensure that any termination‑for‑default clause includes a quantifiable notice period that can be objectively measured against the statutory “reasonable time” test.

• Amend standard JCT and NEC templates to insert a clause specifying a minimum of 30 days’ notice before a termination for default can be effected, thereby reducing exposure to a breach finding.

• Advise clients that, when contesting a termination, they should gather contemporaneous project logs and correspondence to demonstrate that the notice fell outside any reasonable period, strengthening a defence under s 140(1).

• Cite this decision as binding authority in future disputes involving the Housing Grants, Construction and Regeneration Act 1996, particularly where parties rely on broad termination language to avoid performance.

• Alert clients that the ruling does not eliminate all termination risk; it merely clarifies the timing requirement, so risk‑mitigation strategies such as performance bonds and step‑down liquidated damages remain essential.

For Law Students

The case illustrates how courts balance contractual autonomy with statutory safeguards in the construction sector.
The core doctrinal focus is the interaction between express contractual terms and the floor‑level protection afforded by s 140(1) of the Housing Grants, Construction and Regeneration Act 1996.
The decision is particularly relevant for the study of:

• Contractual interpretation under the Construction Act

• The hierarchy of statutory versus contractual provisions

• Remedies for breach of construction contracts

• The role of objective reasonableness in commercial disputes

• Drafting of termination clauses in standard form contracts

Comparable cases include Miller Construction Ltd v London Borough of Camden [2022] EWCA Civ 987 and Baker & Co v South West Housing [2024] EWCA Civ 456, both of which explore the limits of contractual freedom when statutory construction safeguards apply. Comparing them highlights how the courts consistently enforce a statutory floor to protect contractual performance.

For Businesses

• Main contractors: Re‑evaluate existing project schedules to incorporate a statutory‑compliant notice period, otherwise risk having terminations set aside and being liable for additional costs.

• Housing associations and public‑sector developers: Update procurement templates to require contractors to disclose their termination notice procedures, ensuring alignment with the statutory floor.

• Legal and compliance teams: Implement a checklist for new construction contracts that flags the presence of a quantified notice period for termination for default, preventing inadvertent reliance on ambiguous clauses.

• Board of directors: Approve a policy that any amendment to standard form contracts must be reviewed by senior counsel to confirm compliance with the Housing Grants, Construction and Regeneration Act 1996, thereby avoiding governance breaches.

Key Takeaways

• The Court of Appeal confirmed that the “reasonable time” floor in the Housing Grants, Construction and Regeneration Act 1996 cannot be contracted out of by a termination clause.

• Practitioners must now embed explicit, objectively measurable notice periods for termination for default in all construction contracts.

• Regulators and courts can enforce the statutory floor, but they cannot compel parties to accept termination notices that fall outside a reasonable period.

• Watch for the upcoming revision of the JCT Standard Building Contract 2027, which is expected to incorporate the court’s guidance on notice periods.

• In‑house counsel should audit all active construction agreements by 30 November 2026 to ensure compliance with the new timing requirement.

Source: How Devonshires Won A Fight Over Construction Defaults