Performance Bond Unaffected By Side Letter

Hackney Empire Limited v Aviva Insurance UK Limited [2011] EWHC 2378 (TCC)

Hackney Empire entered into an agreement with Sunley Turriff Construction to refurbish the Hackney Empire Theatre. There was a long sequence of contractual events, during which Aviva issued a performance bond for the obligations of the contractor under the contract. The parties then entered into a side agreement under which a previous oral agreement to make certain payments in respect of the contractor's claims for losses and to target a new completion date was formalised. The target date was later than that in the contract, but the side letter did not purport to grant an extension of the time under the building contract. The contractor went into administration and the employer demanded repayment of sums paid under the side agreement. When these and other payments were not made, the employer made a claim against Aviva under the bond. Aviva rejected the claim. The bond contained the