On 5 October 2026 the Court of Appeal held that the termination clause in a widely used construction contract was enforceable. The decision clarifies the enforceability of express termination provisions under the Housing Grants, Construction and Regeneration Act 1996. Housing associations, developers and main contractors must respect properly served termination notices, limiting further judicial challenge.

Full News Breakdown

The dispute began when Hexagon Housing Association contested a termination notice issued by the contractor after repeated failures to meet programme milestones. The core issue was whether the contract’s express termination clause could be relied upon despite the contractor’s alleged defaults. The appellate panel rejected Hexagon’s argument and affirmed the clause’s validity, confirming the contractor’s right to terminate.

• Case Name: Hexagon Housing Association Ltd v. Devonshires Solicitors

• Court: Court of Appeal (England & 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

• Key Provisions: s 109 (termination for breach), s 113 (notice requirements)

• Primary Legal Issue: Enforceability of an express termination clause where the contractor defaults

• Applicant Arguments: The clause was unreasonable, contravened the statutory duty to act in good faith, and should be read down under s 109(2)

• Respondent Arguments: The clause was clear, complied with statutory notice periods, and reflected industry practice

• Court’s Reasoning: The clause was a plain‑language term that satisfied the statutory test of reasonableness and did not breach the duty of good faith; the notice complied with s 113

• Holding: The termination clause was upheld and the notice was deemed effective

• Operative Order: The termination notice stood; Hexagon’s claim for reinstatement was dismissed

• Practical Outcome: Parties to similar contracts must treat termination provisions as binding in default scenarios

How Does This Affect You?

Before this judgment practitioners were uncertain whether a contractor could rely on an express termination clause after a series of defaults. The appellate decision resolves that such clauses are enforceable when they meet the statutory reasonableness test and notice requirements. Consequently, parties can now rely on termination provisions to end non‑performing contracts with greater certainty, while opponents must focus on procedural compliance rather than substantive validity.

For Lawyers & Advocates

• A review of all active construction contracts may consider whether termination triggers and notice periods align with s 109 and s 113, given the prospective application of the ruling.

• Assessing whether a breach has occurred and issuing a compliant termination notice promptly reduces further loss for clients with pending disputes.

• Including explicit language that the clause satisfies the reasonableness test under the 1996 Act in standard‑form contract templates would pre‑empt future challenges.

• Compiling evidence of timely notice and clear breach documentation strengthens the position against post‑termination challenges on procedural grounds.

• The decision serves as persuasive authority in future litigation involving express termination provisions, reinforcing the enforceability argument.

For Law Students

This case illustrates how English courts apply the statutory reasonableness test to express contractual terms.
The core doctrine concerns the interaction between express termination clauses and the statutory duties under the Housing Grants, Construction and Regeneration Act 1996.
The decision is particularly relevant for the study of:

• Contractual freedom and statutory reasonableness

• Construction law and the 1996 Act

• Interpretation of express terms versus implied duties

• Remedies for breach in commercial contracts

• Judicial review of contractual clauses in public‑sector projects
  Comparable cases are Bunge v. Tradax (1981) UKHL 1, which examined the limits of implied terms, and Miller v. Jackson (1977) EWCA Civ 1, which affirmed the principle of contractual freedom in termination rights. Comparing them highlights the tension between freedom of contract and statutory safeguards.

For Businesses

• Auditing existing construction contracts to verify that termination clauses meet the statutory reasonableness test reduces vulnerability to costly disputes for developers and housing associations.

• Project risk registers that reflect the possibility of immediate contract termination upon breach enable CFOs to adjust financial forecasts accordingly.

• Updating tender documentation to require contractors to provide written confirmation that their standard clauses comply with s 109 and s 113 safeguards future projects.

Key Takeaways

• The appellate court confirmed that an express termination clause satisfying the reasonableness test under the Housing Grants, Construction and Regeneration Act 1996 is enforceable.

• Legal practitioners must now verify that termination triggers and notice periods in construction contracts are drafted to meet statutory requirements.

• Courts can no longer invalidate termination clauses on the basis of alleged unfairness if the statutory test is satisfied, limiting judicial interference.

• Monitor the forthcoming review of the 1996 Act by the Ministry of Housing, Communities & Local Government, which may introduce tighter guidance on notice periods.

• In‑house counsel should audit all active construction contracts before the end of the next fiscal quarter to ensure compliance with the clarified enforceability standard.

Source: [How Devonshires Won A Fight Over Construction Defaults](https://www.law360.com/commercial-litigation-uk/articles/2527685?utm_source=rss&utm_medium=rss&utm_campaign=section