Jurisdiction(s):
United Kingdom

Ziggurat v HCC: JCT performance bond calls on insolvency—bespoke trigger; failure to pay clause 8.7 debt a breach; ascertainment suffices, surety may contest quantum (TCC, England and Wales)

Published on: 21 December 2017

Published by a LexisNexis Construction expert

Legal News

Article summary

What are the practical implications of this case?

The bond was found to be triggered by insolvency alone because the parties had agreed a tailored clause to that effect. Even so, the ruling is of wider significance as it reinforces that, under the JCT termination regime:

the contractor’s insolvency, by itself, is not a breach of contract by the contractor; and
where, following insolvency, the contractor fails to remit sums due to the employer assessed under the contract—for example, the cost of engaging others to complete the works—that failure amounts to a breach of contract

This distinction is important where an employer must first establish a contractor breach before calling on a performance bond. That is the position under the unamended ABI Model Form—for a suggested change on this point, see Practice Note: Amendments to ABI Model Form of Guarantee Bond.

What was the background?

Ziggurat appointed County Contractors (County) as contractor under a JCT 2011...

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