threshold concepts in construction law: prevention & extension in construction contracts

Threshold Concepts in Construction Law:

Prevention & Extension in Construction Contracts

Brodie McAdam University of Salford

http://www.salfordconstructionlaw.com

http://www.salfordconstructionlaw.com/

Prevention & Extension in construction contracts

Brodie McAdam http://www.salfordconstructionlaw.com


What are we talking about & why?

• We are focussing on the common law which underpins, and informs extension of time clauses, and liquidated damages provisions

• Quite a tricky area, because, to understand it fully involves juggling a number of different legal concepts

• As for why to bother, understanding the underlying issues may assist with practical aspects of administering contracts, and of arguing points if matters become contested.



Why Problematic?


Common law

Contract terms

Breach of contract

Damages

Implication of terms

Prevention Extension of time

Liquidated damages

Causation

Time at large

Conditions precedent

Concurrency


Time

• Just like any other obligation

• Failure to complete on time: breach of contract

• Consequences?



Consequences of Breach

• Usually damages with continuing obligation to complete work

• Damages?



Damages

• Loss which the employer can prove as a result of the breach…



Liquidated Damages

• General damages troublesome to prove

• Solution – liquidated damages



So far so good but…

• What about prevention and/or extension?

• Coming to that now…



What about if…

• Contractor supposed to complete building by 1 May

• LDs set at £10,000 per day late.

– Contractor uses substandard glazing units which are only discovered at the last minute, and so the building finishes a week late; or

– Unexpectedly hard frost bursts pipes in water system during commissioning, and so the building finishes a week late; or

– Employer decides on different anti-glare glazing with a longer lead time, and so the building finishes a week late

• Does the contractor pay the £70k LDs?



Um…

• Substandard glazing – likely breach of contractor’s obligations causes delay – LDs payable.

• Bad weather – not the Contractor’s fault, but at common law the contractor’s risk – LDs could be payable, though many standard form contracts make weather a “neutral” event (time but no money)

• Different glazing – contractor blameless. Employer’s responsibility…



Prevention

• Employer has prevented the contractor from meeting the completion date.

• Would be unjust to hold the contractor to that completion date so...

• That completion date falls away and if there’s no contractual method to set a new date then time will become “at large”.



At large

• Just means that the contractor has a reasonable time to complete the work.

• (N.B. this is what is implied by common law and statute if there is no express agreement as to completion date)

• Establishing a “reasonable time” is a length of string calculation and preferably avoided by employers

• The solution…


Extension of time clause

• This permits the completion date to be moved on if the employer has delayed progress.

• This therefore preserves LDs, since the contractor is not required to pay damages for the period during which they were prevented from completing by the employer.

• Extension of time provisions tend to cover much more than what amounts specifically to common law prevention.


Why now?

• Two specific issues exercising the courts involving prevention and extension:

– Condition precedent requirements

– Whether it is permitted to “apportion” under JCT


Condition Precedent Issue


• Yes, you can have an extension of time for my acts of prevention, so long as you give me proper notice...

• Possible problem – back door way to get the contractor liable for employer delay.

• Some Australian case law to suggest that such provisions may oust the completion date

• However, so far, in England and Wales the argument hasn’t worked, e.g:

• Steria Ltd v Sigma Wireless Communications Ltd [2007] EWHC 3454

Concurrent Delay/Apportionment

• Issue relates to where you have two (or more) causes of delay, each of which could be causing the delay (i.e. are concurrent), and one is an employer risk, and another is a contractor risk. Should the contractor get the extension of time?

• English authority says “yes”• Scots (not binding in England) says “no”• Cases:

– Boot v Malmaison (1999) 70 Con LR 32– City Inn v Shepherd [2010] ScotCS CSIH 68– De Beers v Atos [2010] EWHC 3276


Recap and Conclusion


threshold concepts in construction law: prevention & extension in construction contracts

Documents

damagesbrodie mcadam

nowbrodie mcadam http

breachbrodie mcadam

prevention extension

complete building

construction law

extension of time clauses

contractor blameless