Are Adjudicators and the Courts bound by commercial agreements reached during the Works?

Clerkenwell Lifestyle (UK) Limited v HG Construction Limited [2026] EWHC 1406 (TCC) is a cautionary tale for contractors seeking to rely on commercial negotiations. The decision emphasises that the “language of agreement” is insufficient to bind adjudicators and courts without clear evidence that the parties intended to create a binding, free-standing legal agreement, underscoring the importance of formally recording commercial agreements or variations and ensuring that key legal and jurisdictional arguments are raised at the earliest opportunity.

Background

Clerkenwell Lifestyle (UK) Limited v HG Construction Limited concerned an alleged commercial agreement regarding a contractor’s entitlement to an extension of time under an amended JCT contract.

The factual background to the TCC decision can be summarised as follows:

• the employer, Clerkenwell Lifestyle (UK) Limited, engaged the contractor, HG Construction Limited, to design and construct a hotel and residential apartments;
• the contractor issued a notification requesting a 12-week extension of time;
• after the employer’s agent set out a detailed proposal to address this extension of time claim and the contractor responded to “confirm agreement”, the contractor was granted a 12-week extension of time;
• the employer commenced an adjudication seeking payment of over £1.1 million in liquidated damages and, as part of that claim, sought a declaration that the correct completion dates were set out in the employer’s agent’s extension of time awards “or such other date as the Adjudicator reasonably determines.”;
• the adjudicator determined that the contractor was entitled to a further extension of time but, in doing so, departed from the extension of time award granted by the employer’s agent; and
• after the decision was issued, the contractor argued that the adjudicator could not revise the prior extension of time award as it was “the subject of a binding agreement between the Parties”.

To resolve this dispute the TCC was required to determine:

• whether the adjudicator had acted in breach of natural justice by failing to consider the alleged agreement between the parties; and
• whether the parties had entered into a free-standing and binding legal agreement regarding the contractor’s entitlement to an extension of time.

Alleged breach of natural justice

Mrs Justice Jefford rejected the contractor’s argument that the adjudicator had acted in breach of natural justice for two reasons.

Firstly, the dispute “was expressed in broad terms as a dispute as to the completion dates” and during the adjudication the contractor had not taken issue with the framing of the dispute or challenged the adjudicator’s jurisdiction.

Secondly, Mrs Justice Jefford referred to:

• Pilon Ltd. v Breyer Group plc where Mr Justice Coulson held that an “inadvertent failure” to consider a sub-issue arising in relation to the dispute “will not ordinarily render the decision unenforceable”;
• KNN Colburn LLP v GD City Holdings Ltd where Mr Justice Stuart-Smith explained that the key question to be considered is “whether the inadvertent failure means the adjudicator has not effectively addressed the major issues raised on either side”; and
• Global Switch Estates 1 Ltd v Sudlows Ltd where Mrs Justice O’Farrell stated that: “If the adjudicator fails to consider whether the matters relied on by the responding party amount to a valid defence to the claim in law and on the facts, that may amount to a breach of the rules of natural justice.”.

Mrs Justice Jefford therefore concluded that a breach of natural justice could only arise if the relevant material defence, or the matters constituting that defence, had been put before the adjudicator.

In this instance, whilst the contractor had summarised the extension of time awards granted by the employer’s agent, it made no reference to any binding agreement to revise the completion dates.

Mrs Justice Jefford also noted that the independent expert evidence relied on by the contractor:

• made no reference to any legally binding agreement; and
• used the baseline programme, rather than the relevant extension of time awards, as its starting point.

It was therefore clear that the defence was not put before the adjudicator and that there was no breach of natural justice.

Alleged free-standing and binding legal agreement

Although the parties’ correspondence “used the language of agreement”, Justice Jefford concluded that “the word “agree” was being used in the sense of being prepared to or willing to do something rather than indicating an intention to enter into a legally binding agreement”. In particular, Mrs Justice Jefford stated that:

• the correspondence issued by the parties referred to and mirrored the required contractual steps and therefore could, at most, be characterised as an agreement as to “how they would operate the contractual mechanism”, rather than an agreement to “enter into some free-standing and binding agreement to revise the completion dates”;
• there was uncertainty regarding the material terms of the alleged agreement;
• it was impossible to see the extension of time proposal as being “outside the confines of the contractual mechanism for extensions of time”; and
• it was clear that “neither party conducted itself as if there was a binding agreement as to revised completion dates rather than an extension of time granted under the contract”.

Key takeaways

This decision emphasises that to ensure effect is given to commercial agreements, contractors should:

• formalise commercial negotiations to ensure that the terms of any agreement are clear and that there can be no doubt as to whether the discussions were intended to create a binding and free-standing legal agreement (and consider whether it is useful or necessary under the terms of the contract to execute a standalone deed of variation or similar document that reflects the change, rather than simply adhering to the relevant contractual mechanism);
• act in accordance with the agreements reached;
• raise all jurisdictional challenges at the outset of an adjudication and ensure that material defences are plainly identified in each submission; and
• inform consultants and experts of any commercial agreements reached during the project that could be relevant to the issues in dispute.

Beale & Co provides specialist live project advice to contractors and consultants and has extensive experience in pursuing and defending claims including adjudication. If you require assistance with your project or dispute, please contact Kate Ross and Fraser Hopkins.