Estoppel and Waiver in Construction Contracts: Have You Unknowingly Given Up Your Rights?
By Brian Moriarty MCIArb | Founder, BAM Consult
Construction subcontractors spend considerable time negotiating prices, agreeing programmes and delivering projects. Yet surprisingly little attention is sometimes given to how their actions and correspondence during the works might affect their contractual rights.
Two legal principles that can have significant consequences are estoppel and waiver.
Both can potentially prevent a party from relying upon rights it would otherwise have under a construction contract.
But what do these terms actually mean, and how might they affect a subcontractor’s entitlement to payment?
Having successfully defended against both arguments in a recent construction adjudication, I have seen first-hand how these principles can be used in an attempt to defeat an otherwise valid contractual claim.
What Is Estoppel?
In simple terms, estoppel can prevent a party from adopting a position that is inconsistent with something it has previously represented or with an assumption on which both parties have proceeded, where the necessary legal conditions are established.
Consider a subcontractor who repeatedly confirms that a particular valuation has been agreed. The main contractor subsequently relies upon that agreement when making commercial decisions.
If the subcontractor later attempts to pursue an entirely different valuation, the main contractor might argue that the subcontractor is estopped from changing its position.
However, estoppel is not established simply because a party has previously expressed a different commercial view.
Depending on the form of estoppel alleged, matters such as the representations made, any shared assumptions, reliance and whether it would be unjust to permit a change of position may all be relevant.
The circumstances and supporting evidence are crucial.
What Is Waiver?
Waiver concerns the abandonment or relinquishment of a right.
A party might expressly agree to give up a contractual entitlement. Alternatively, depending on the circumstances, abandonment may be inferred from its conduct.
For example, a subcontractor might be accused of waiving a contractual right because it has repeatedly administered a particular aspect of the works differently from the procedure set out in the subcontract.
However, acting in a particular way during the administration of a contract does not automatically mean that a party has permanently abandoned its contractual rights.
The question is whether the evidence demonstrates the necessary abandonment of the right in question.
This distinction became particularly important in an adjudication I conducted in 2026.
A Real Example: Estoppel and Waiver Raised in Adjudication
In 2026, I acted as sole Lead Counsel for a specialist construction subcontractor in a dispute concerning the valuation of works undertaken under a lump sum subcontract.
The original subcontract provided for a defined package of fire door maintenance works at an agreed lump sum price.
During the project, the precise maintenance requirements evolved as individual doors were inspected and the necessary remedial works identified.
The main contractor subsequently sought to adjust the original subcontract value using a retrospective assessment of the works undertaken.
Our position was that the original contractual obligation remained unchanged. The subcontractor had agreed to deliver the specified maintenance outcome for a lump sum, and changes in the precise remedial work required to achieve that outcome did not automatically constitute variations permitting the main contractor to remeasure the original works.
The dispute eventually proceeded to adjudication.
The Responding Party’s Defence
The responding party instructed specialist construction solicitors, who challenged our interpretation of the subcontract.
Among their arguments was that the subcontractor’s previous correspondence, interim valuations and final account discussions demonstrated acceptance of a revised scope and valuation.
They argued that the subcontractor could not subsequently return to the original contractual position.
To support their defence, the responding party relied upon established legal authorities, including:
Mears Ltd v Shoreline Housing Partnership Ltd [2015] EWHC 1396 (TCC), in support of its estoppel arguments.
City Inn Ltd v Shepherd Construction Ltd [2010] ScotCS CSIH 68, in support of its alternative waiver argument.
Their position was essentially that, regardless of our interpretation of the original subcontract, the subcontractor’s previous conduct prevented it from pursuing that entitlement.
This was a potentially significant challenge to the claim.
How We Defended Our Position
In preparing our Reply, I challenged the suggestion that the subcontractor had either accepted a binding revision to the original contractual arrangements or abandoned its rights.
A fundamental distinction needed to be made between the commercial administration of a live contract and an agreement to change the underlying contractual entitlement.
Throughout the works, the parties had exchanged valuations, discussed potential adjustments and attempted to progress the account commercially.
But those discussions did not necessarily establish that the original lump sum obligation had been replaced by a remeasurement arrangement.
We maintained that:
The original contract established a lump sum obligation, and the contractual variation provisions did not provide a general right to retrospectively remeasure the original works.
Interim valuations and ongoing final account negotiations did not, in themselves, establish a binding agreement to amend that obligation.
There was no relevant shared assumption or unequivocal representation sufficient to establish the estoppel alleged by the responding party.
The subcontractor’s previous conduct was consistent with the ongoing administration of the account, rather than an intention to abandon its contractual rights.
The responding party’s reliance on case law therefore had to be considered against the actual contractual provisions and the evidence of how the parties had dealt with one another.
The existence of a legal authority does not mean that its principles necessarily support the circumstances of every dispute.
The Adjudicator’s Decision
The adjudicator accepted our central contractual position.
He determined that the original works were subject to a lump sum price and that the parties had not subsequently agreed to replace that arrangement with the retrospective remeasurement proposed by the responding party.
He also expressly rejected the estoppel and waiver defences.
In considering estoppel, the adjudicator concluded that the parties’ ongoing commercial dealings did not establish the relevant shared assumption or unequivocal representation. He also found that Mears was not analogous to the circumstances before him.
On waiver, the adjudicator found no evidence that the subcontractor had abandoned its contractual rights. He considered City Inn but found that authority of no assistance in determining the particular dispute.
The adjudicator ultimately awarded the subcontractor £66,548.74.
Importantly, although not every individual valuation item advanced in the adjudication was successful, the fundamental contractual position was maintained and both estoppel and waiver were rejected.
For me, the case reinforced an important lesson: commercial correspondence must be interpreted in its proper contractual context. Previous discussions or provisional valuations do not automatically extinguish an otherwise valid entitlement.
What Should Subcontractors Look Out For?
Estoppel and waiver are not simply legal arguments raised during adjudication. The circumstances that give rise to them can develop gradually throughout an ordinary construction project.
There are several practical steps subcontractors should consider.
Understand your contractual rights before work begins.
Make sure you understand the agreed pricing arrangement, variation provisions, payment mechanisms and any requirements for amending the subcontract. You cannot effectively protect rights you have not identified.
Be careful when discussing revised valuations.
Commercial negotiations are a normal part of construction. However, correspondence suggesting that a valuation is agreed or final may later be relied upon as evidence of your acceptance.
Where matters remain subject to agreement, make that position clear.
Distinguish interim valuations from final agreements.
An amount included in an interim application may reflect the parties’ working arrangements at that stage. Ensure that any provisional nature of the valuation is properly recorded.
Don’t overlook the importance of conduct.
It isn’t only what you write that matters. How you administer the subcontract, respond to instructions and deal with proposed changes may also become relevant.
Challenge incorrect contractual interpretations early.
If a main contractor begins administering the subcontract in a way that is inconsistent with your understanding of its terms, address the issue promptly and preserve a clear written record of your position.
Do not assume that a reservation of rights solves everything.
Appropriate reservations can be helpful, but they are not a substitute for complying with contractual procedures or carefully documenting commercial agreements.
The Importance of Getting the Contract Right
In my experience, construction contracts are often treated as documents that only become important when something goes wrong.
Unfortunately, that is usually the worst possible time to discover that the contractual terms are unclear, onerous or inconsistent with the way the project has been administered.
A properly negotiated subcontract should establish a fair and workable arrangement for both parties, with clear procedures for payment, variations, notices and changes to the works.
It should also be administered consistently throughout the project.
The adjudication discussed above demonstrates that established contractual rights can withstand sophisticated legal challenges where the contract and evidence support the position being advanced.
But it also demonstrates how previous correspondence and commercial dealings can become central to a substantial payment dispute.
The best protection is not simply knowing how to defend your contractual rights in adjudication. It is understanding and protecting those rights from the very beginning.
Brian Moriarty MCIArb is the founder of BAM Consult, providing specialist commercial management, contract reviews and dispute-resolution services exclusively to construction subcontractors.
This article is provided for general information and does not constitute legal advice. The adjudication example has been anonymised.