Liabilities under Pre-Construction Services Agreements

Recently, the Technology and Construction Court decided the case of Belong (Construction) Limited (Belong) v Seddon Construction Limited (Seddon) [2026] EWHC 1275 (TCC) which determined that liabilities contained in a Pre-Construction Services Agreement (PCSA) (for pre-existing breaches) could survive even though the parties had subsequently entered into a JCT main contract. The terms and liabilities were not extinguished after the PCSA had been "subsumed into and subject to" a main JCT contract.

What were the facts?

In May 2020, Belong had instructed Seddon (Defendant) to carry out works on a care home development pursuant to a PSCA. The PCSA incorporated Proposed Contract Documents (PCD) which included the draft main JCT Standard Building Contract. As part of the PCSA, Seddon was instructed to inspect, and carry out opening-up and testing of air sealing works (ASW). This had formerly been carried out by a previous contractor.

In December 2020, the parties entered into the JCT Contract. Importantly, the final executed JCT contract did not include the requirements for the ASW testing, as it was included in the PCDs. As a result, Seddon was instructed by the Contract Administrator (CA) to carry out the ASW. Seddon complied with the instruction, which resulted in a delay to its works. Seddon subsequently requested an extension of time (EOT) from the CA. The CA rejected the EOT. The CA maintained that the ASW were always required and any delay was simply a result of Seddon's earlier breach of the PCSA and failure to carry out the ASW. 

Belong focussed on the specific wording in the PCSA, specifically that the words "obligations" and "liabilities" were intentional. Belong argued that the liabilities continued into the JCT Contract for pre-existing breaches. To the contrary, Seddon argued that any PCSA obligations were "subsumed into and subject to" the JCT Contract and as such were replaced. It further argued that clauses 2.28.6.5 and 4.20.3 of the JCT Contract which prevented Seddon from claiming relief for events which arose from its own "error, omission, negligence or default" were limited to the JCT Contract.

The dispute led to an adjudication referred by Seddon. The adjudicator decided in favour of Seddon. This led Belong to bring about a Part 8 Claim, challenging the decision by the adjudicator and for final determination of the dispute.

The TCC's analysis and findings

The Court paid close attention to the wording of the contracts:

• Judge HHJ Stephen Davies, at the High Court on The Court focussed on Clause 2 of the PCSA, similarly to Belong, paying close attention to the specific wording of "obligations" and "liabilities". The Court noted that the PCSA deliberately distinguished the two words. Clause 2.1-2.2 focused on initial "obligations" whereas clause 2.3 distinguished "liabilities" reflecting secondary obligations for pre-existing breaches of obligations committed before entry into the JCT Contract. Initial obligations expired at the end of the PCSA when the JCT contract came into force however any breaches and as such any liability as a result of previously incurred breaches under the PCSA allowed for these secondary obligations. The PCSA was an individual contract, not a letter of intent for the same construction works.
• The wording of the PCSA "subsumed into and subject to" were also considered by the Court. Taken in its literal sense, HHJ Stephen Davies concluded that the thing subsumed into and subject to, did not extinguish its entire existence. This meant that the liabilities and rights from any earlier breaches remained even into the JCT Contract notwithstanding that much of the PCSA had now ceased to exist. These rights and liabilities were now included and subject to the JCT Contract.
• The Court also rejected the adjudicator's narrow reading of clauses 2.28.6.5 and 4.20.3 of the JCT Contract and held that the wording "error, omission, negligence or default" was broad and could apply to pre-existing breaches of the PCSA. As such the CA's rejection of Seddon's request for an EOT was upheld.

The Court ruled in Belong's favour. Based on Seddon's failure to comply with the requirements to inspect, and carry out opening-up and testing of the ASW, which were not extinguished by the entry to the JCT Contract, the Court upheld Belong's contractual claim under the PCSA.

Key takeaways

1. PCSA obligations may be relied on to resist claims under the main JCT contract for an extension of time or loss and to reclaim costs where contract pre-conditions failings have resulted in delays (depending on the facts of the case).
2. This judgment highlights the importance of drafting. The language used in construction contracts should be carefully considered specifically when drafting a PSCA with the intention of the transition to the main JCT contract. It is important to not use the wording synonymously, rather to allow them their own individual and intentional meaning. As seen from this case, PCSA liabilities for obligations which have been breached may continue into the JCT Contract and may still hold their own independent existence.