Extensions of time/Adjustment of the completion date
Extensions of time/Adjustment of the completion date
156 Can the architect ignore delays if the
contractor has failed to give proper notice?
This is a common question, the answer to which depends on the terms of the contract. At one time it was considered that if the employer committed any act of prevention, the contractor was entitled to an extension of time irrespective of any notice provisions, and if no extension was given, time became at large and the contractor’s obligation was simply to complete the Works within a reasonable time.
It has since been recognised that such an approach would allow a contractor to put time at large at will by the simple expedient of ignoring notice provisions which would have triggered an extension of time. It has been held that if a contractor ignores a notice provision which is a condition precedent, there will be no entitlement to extension of time, even though there would otherwise be a clear basis on the grounds of the employer’s acts of prevention.1 It has been said that in order for a requirement for notice to be a condition precedent, several serious conditions must be satisfied. For example, the time for service of the notice must be stated and must make clear that if there is a failure to give the notice, a specific right will be lost. That position has been considered by the court, and it was rejected expressly in regard to extension of time where there was a clause which had as a proviso the words, ‘the sub-contractor shall have given within a reasonable period written notice to the contractor of the circumstances giving rise to the delay’.2 The court held:
if there is a genuine ambiguity as to whether or not notification is a condition precedent, then the notification should not be construed as being a condition precedent, since the provision operates for the benefit of only one party i.e. the employer, and operates to deprive the other party (the contractor) of rights which he would otherwise enjoy under the contract.
. . . in my judgment the phrase . . . is clear in its meaning. . . . In my opinion the real issue which is raised on the wording of this clause is whether those clear words by themselves suffice, or whether the clause also needs to include some express statement to the effect that unless written notice is given within a reasonable time the sub-contractor will not be entitled to an extension of time.
In my judgment a further express statement of that kind is not necessary. I consider that a notification requirement may, and in this case does, operate as a condition precedent even though it does not contain an express warning as to the consequence of non-compliance.
In City Inn Ltd v Shepherd Construction Ltd,3 the contractor was required to carry out various actions and make specific submissions before being entitled to an extension of time in regard to certain architect’s instructions. The court had no hesitation in holding that failure to comply with the requirements would prevent the contractor from getting any extension of time in respect of the particular instructions. It is quite common to find a requirement for notice in standard form contracts, particularly in regard to extensions of time and applications for loss and/or expense. These decisions suggest that the courts will not ignore a contractor’s failure to give notices prescribed by the contract, and it seems likely that such clauses will be interpreted as conditions precedent. If that is correct, contractors will have to give timely and effective notices before the architect need consider them.
157 What is the position if the contractor is
delayed by delays in obtaining specified goods
from overseas suppliers?
Architects sometimes specify goods which are only obtainable from suppliers outside the UK. Their reasons for doing so are largely immaterial, but in most instances it is probably because the particular item is attractive in terms of design or function and is not available in the UK. Once the item is specified and/or included in the bills of quantities, it is the responsibility of the contractor, when preparing its tender, to check availability of the specified item. When the contractor submits its tender, it is offering to carry out the work and supply the goods in the documents provided for tendering purposes.
Once the tender is accepted or a form of contract based on the tender is executed by the parties, the contractor’s obligation to supply the item is legally binding. From then on, the contractor should order the item and enter into a contract of sale with the supplier. Clearly, when dealing with oversees suppliers, contracts of sale are not as straightforward as if the supplier was based in the UK. The contract itself may be in accordance with some other system of law which raises its own problems if things go wrong. However, by tendering, the contractor has taken all these difficulties on board. In these circumstances, a wise contractor may seek to qualify its tender at an early stage. If not, the contractor is liable for any late delivery just as if the delivery was late from a UK supplier.
If the goods in question are not just late but unobtainable, SBC excuses the contractor from the obligation of supply altogether, and it is a matter for the architect to specify some other product. If the fact of the goods being unobtainable causes delay, the contractor would be entitled to an extension of time, and depending on all the circumstances, the contractor could successfully make an application for loss and/or expense. The question of materials and goods not being procurable is discussed in question 45.
158 Is a note in the minutes of a site meeting
sufficient notice of delay from the contractor?
From time to time, questions arise about the status of site meeting minutes. A favourite question is whether they constitute a written instruction of the architect as required by the JCT and other standard contracts. The answer is probably that they do, provided that the minutes are drafted by the architect. A more bizarre question is whether minutes are written applications by the contractor in respect of direct loss and/or expense. The answer to that is clearly that they are not, even if they record that the contractor asked for loss and/or expense at the meeting, unless the contractor actually drafted the minutes.
A related question is whether a note in site meeting minutes could be a notice of delay to comply with clause 2.27.1 of SBC. The clause requires the contractor to give written notice forthwith whenever it becomes reasonably apparent that the progress of the Works is being or indeed is likely to be delayed. This question was given short shrift by the court in a recent decision:4
I also consider that the written notice must emanate from [the sub-contractor]. Thus for example an entry in a minute of a meeting prepared by [the project manager] which recorded that there had been a delay . . . would not in my judgment by itself amount to a valid notice under cl.6.1. The essence of the notification requirement in my judgment is that [the main contractor] must know that [the sub-contractor] is contending that relevant circumstances had occurred and that they have led to a delay in the sub-contract works.
In that case, an amended MF/1 form of contract was used between main contractor and sub-contractor, but the principle of a written notice was similar to what is required under JCT contracts. Anything in a document written by someone other than the contractor clearly cannot be the contractor’s written notice. However, there seems no reason to doubt that if a progress report is presented in writing to the architect at a site meeting, that report would suffice as a written notice, provided it contained the relevant information required under the contract. Any reference to it in the site meeting minutes would be no more than a reference. The notice would be the report itself.
159 Is time of the essence in building
Time is ‘of the essence’ when any breach of stipulations about time in a contract can be treated as repudiatory so as to entitle the other party to terminate performance of its obligations and claim damages. There are probably only three instances where time will be of the essence:
• if it specifically states in the contract that time is of the essence;
• if time being of the essence is a necessary implication;
• if one party is in delay to an unreasonable extent, time may be made of the essence if the other party serves a notice on the party in breach setting a new and reasonable date for completion.5
The term must be so fundamental that a failure to comply would make the contract almost worthless so far as the other party was concerned. If a shop orders goods for sale to meet a particular demand, for example, and that demand is known to the supplier, failure to meet the required delivery date might, depending on all the circumstances, amount to a breach of an essential term.
Time will not normally be of the essence in building contracts unless expressly stated to be so. The reason is that the contract makes express provision, in the form of an extension of time clause and liquidated damages, for the situation if the contract period is exceeded.6 Therefore, it would be nonsense to make time of the essence: One term would be to the effect that failure to complete by the due date would entitle the other party to accept the failure as repudiation, while the other term would allow the contractor to an extension of time for appropriate reasons. Time was made of the essence in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd,7 and this apparently gave the employer the right to ‘determine the contract at the end of’ the period as extended by the architect. In the case of most building contracts, the provisions for termination (e.g. for failure to proceed regularly and diligently) adequately cover the situation.
160 What, in practice, are ‘concurrent delays’?
Concurrent delays are the subject of much debate and, it must be said, a great deal of misunderstanding. A simple approach is to say that concurrent delays are when two or more things happen at the same time and delay the completion date of a particular contract. However, that is not the whole story. There are two kinds of concurrent delays. There are delays which occur at the same time to two different activities, and there are the delays which occur at the same time to the same activity. It is the latter which causes the problems.
If delays act on different activities, it is easy to deal with the situation by inputting the delays one at a time into the contractor’s programme and noting the effect. This can be done using computer software. Only the delays which are grounds for extension of time must be entered. Contractor’s culpable delays are ignored. One court commented:
it is agreed that if there are two concurrent causes of delay, one of which is a Relevant Event, and the other is not, then the contractor is entitled to an extension of time for the period of delay caused by the Relevant Event notwithstanding the concurrent effect of the other event.8
This must be a correct view where the two concurrent delays operate on different activities, and, as noted, computer analysis easily deals with this situation by ignoring all delays which are not relevant events.9
True concurrency is when the causes of delay operate at the same time on the same activity. To take a simple example, a contractor may have difficulty in obtaining labour to lay paving, but the architect may also be delayed in providing the necessary drawings showing the layout of the paving. The courts have not adopted an entirely consistent approach. Indeed, the guidance one might expect from the courts has not been very helpful. Sometimes, what is known as the ‘dominant cause’ approach has been advocated. One court has asked ‘what was the effective and predominant cause of the accident that happened, whatever the nature of the accident may be’.10 It has been said that the test is that of the ordinary bystander, such that anyone looking on would be able to correctly name the predominant cause of the delay. Yet again, a court has suggested that the architect might simply apportion the responsibility for delay between two causes. As to how that is to be done, the court concluded that the basis must be fair and reasonable.11 A sensible view of concurrency was given in a later case:
However, it is, I think, necessary to be clear what one means by events operating concurrently. It does not mean, in my judgment, a situation in which, work already being delayed, let it be supposed, because the contractor has had difficulty in obtaining sufficient labour, an event occurs which is a Relevant Event and which, had the contractor not been delayed, would have caused him to be delayed, but which in fact, by reason of the existing delay, made no difference. In such a situation although there is a Relevant Event, ‘the completion of the Works is [not] likely to be delayed thereby beyond the Completion Date’. The Relevant Event simply has no effect upon the completion date.12
In a more recent case, the court said this: