January 2026 Supreme Court Judgment:
Terminating a contract incorrectly could prove an expensive mistake
Many contract managers and buyers assume that when a supplier or customer breaches a contract, they automatically have the right to terminate it. A recent Supreme Court judgement demonstrates just how dangerous that assumption can be. In Providence Building Services Ltd v Hexagon Housing Association Ltd, a dispute arose over late payments under a construction contract incorporating the JCT Design and Build standard form.
The contractor argued that repeated payment defaults entitled it to terminate the agreement. However, the Supreme Court ruled in favour of the housing association, concluding that the relevant contractual conditions for termination had not been satisfied.
The judgement illustrates a fundamental principle of contract law: a contractual breach does not automatically give the innocent party the right to terminate.
For contract managers, sales managers and procurement professionals, the commercial implications are significant. An organisation that terminates without a valid legal or contractual basis may itself commit a repudiatory breach, potentially exposing it to substantial damages.
My view is that before recommending termination, commercial professionals should understand the distinction between a condition, warranty and innominate term, the difference between contractual and common-law termination rights, and the importance of complying with notice and remedy provisions. These are not simply legal technicalities. They can determine whether an organisation successfully exits an underperforming contract or becomes responsible for a costly dispute.
Contract managers must understand their contractual rights before exercising them, particularly when dealing with supplier underperformance, delayed payments and repeated breaches.
In my opinion, it’s best not to wait until a contract dispute arises to discover what your agreement means.
Contract law is not just for solicitors. Buyers, sales managers and contract managers make commercial decisions every day that can create legally binding obligations and substantial financial liabilities. DPSS’s December Contract Law and Drafting course for Contract Managers, Buyers and Sales Managers, 30 Nov – 1 Dec 2026, will help buyers, sales managers and contract managers understand the legal principles governing contractual obligations, breach, remedies and termination.
Check out our Contract Law Drafting course here
Source: UK Supreme Court, 15 January 2026