8/10/2016

Thepreventionprinciple,timeatlargeandextensionoftimeclauses|Lexology

Thepreventionprinciple,timeatlargeandextensionof
timeclauses|Lexology

UnitedKingdomAugust212009
Mostconstructionandengineeringcontractsrequirethecontractortocompletetheworksbyaspecified
datefailingwhichtheemployerwillbeentitledtorecoverliquidateddamagesfordelayattheratestatedin
thecontract.Thecontractorwillonlyberelievedofitsobligationtocompletebythecontractualdeadlineifan
eventoccursforwhichthecontractorisentitledtoanextensionoftime,butdifficultiescanariseifthe
employer(ortheengineer/architectonitsbehalf)causesdelaytothecompletionoftheworksandthe
contractdoesnotincludeatermprovidingfortheawardofanextensionoftime.Suchadelaycausedbythe
employerisoftenreferredtoasan'actofprevention'.
Thepreventionprincipleandtimeatlarge
The'preventionprinciple'isalongestablishedprincipleunderEnglishlawwherebyapartymaynotenforce
acontractualobligationagainsttheotherpartywhereithaspreventedtheotherpartyfromperformingthat
obligation.Thepreventionprincipleiscloselyalignedtotheprinciplethatnopartymaybenefitfromitsown
breachofcontract.
Inconstructioncontracts,anemployer'sactofpreventioncouldbeeitherabreachofcontract(suchasa
failuretogiveaccesstositeoradelayinissuingdrawingsorapprovals),oravalidaction(forexample
instructingthecontractortoperformadditionalworks,ortosuspendtheworks).Ineithercase,ifthecontract
doesnotprovideforhowthedelayistobedealtwith,theemployerwillnotbeentitledtorequirethe
contractortocompletetheworksbytheoriginalcontractualdeadlineandtherewillbenomeansinthe
contractforfixingareviseddate.Insuchcircumstancestheoriginalcontractualdeadlinefallsawayandtime
becomes'atlarge'.
Iftimeisatlarge,thecontractorisonlyrequiredtocompletetheworkswithinareasonableperiodoftime.
However,thisdoesnotmeanthatthecontractorhasasmuchtimeashewantstocompletetheworks.The
questionofwhatwillbeareasonabletimeforcompletionwillbeamatteroffacttobedecidedatthetime
thequestionarisesandinlightofallthecircumstances1.Whiletheextensionoftimeprovisionsinthe
contract,whichwillbythattimebedefunct,maywellserveasguidance,therewillinvariablybeadispute
betweentheemployerandthecontractorastowhatisareasonabletimeforcompletion.
Wheretimeisatlarge,therewillnolongerbeafixeddatefromwhichliquidateddamagescanrunand
thereforetheemployerwillloseitsrighttoclaimliquidateddamages.Thisdoesnotmeanthatthecontractor
isthenrelievedofallliabilityfordelaytheemployerwillstillbeentitledtoclaimgeneraldamagesifthe
contractorfailstocompletetheworkswithinareasonabletime.
Aclaimforgeneraldamagescouldcausedifficultiesforbothparties.Theemployerwillonlybeableto
recoveritsactual,proven,lossesarisingasaresultofthecontractor'sdelays.Whileitisthoughtthatan
employer'sclaimforgeneraldamagescannotexceedthelevelofliquidateddamagesspecifiedinthe
contract,asofyettherehasbeennoauthorityonthisissueandthereforeremainsarguable.
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8/10/2016

Thepreventionprinciple,timeatlargeandextensionoftimeclauses|Lexology

Extensionoftimeclauses
Giventhecomplexityofconstructionprojects,itiseasytoseethatwithoutanextensionoftimeclausean
employerwouldalmostinvariablycommitanactofpreventionatsomepointduringthecontract.
Moststandardformsofcontractprovidethatthecontractorwillbeentitledtoanextensionoftimeinthe
eventofinstructedvariationsorchanges,suspensions,forcemajeureandchangesinlaw.Dependingon
thetypeofproject,andtheparties'respectivebargainingpower,thecontractormayalsosucceedinadding
certainotherneutraleventstothelistofeventsgivingrisetoanextensionoftime.
Inaddition,aprovisionsuchasthatatClause8.4(c)oftheFIDICSilverBookshouldbeincludedinthelist
ofeventsgivingrisetoanextensionoftimetoavoidtheriskoftimebeingsetatlargebecauseofthe
employer'sactsofprevention:
"anydelay,impedimentorpreventioncausedbyorattributabletotheEmployer,theEmployer'sPersonnel,
ortheEmployer'sothercontractorsontheSite".
Wordingsuchas"oranyothereventbeyondthecontractor'scontrol"isunlikelytobeadequateasithas
beenheldthatitwillnotcoverdelayscausedbytheemployergivinglatepossessionorlateinformation2
andthereforewillnotprotectagainstallactsofprevention.
Conclusion
Iftimebecomesatlargeunderaconstructioncontractasaresultofanemployer'sactofprevention,thisis
likelytocauseproblemsforthecontractoraswellastheemployer.Awelldraftedextensionoftimeclause
willbenefitbothpartiesby:
Maintainingacontractualtimeforcompletion
Preservingtheemployer'srighttoliquidateddamages(andthereforegivingthecontractorcertaintyasto
itsfinancialexposureintheeventofdelays)and
Givingthecontractorrelieffromitsstrictdutytocompletetheworksontimeintheeventthatdelaysare
causedbyspecifiedneutralevents.
Innextmonth'sConstructionDisputeAvoidanceNewsletterwewilllookatwhetheracontractorcanrelyon
thepreventionprincipletoavoidpayingliquidateddamageswhereithaslosttherighttoclaimanextension
oftimebyfailingtocomplywiththecontractualnoticerequirements.
Toviewallformattingforthisarticle(eg,tables,footnotes),pleaseaccesstheoriginalhere.
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