Legalaid

Misleading intentions

I have a dispute on an engineering and construction contract. The contract documents sent to the contractor contained the employer’s requirements. The contractor returned its proposals and requested that the letter of intent contain the words “we write to confirm that it is the intention to enter into contract with you on the basis of your contractor’s proposals documents”. It has subsequently come to light that the contractor’s proposals did not contain certain specific employer’s requirements – namely hoisting equipment and electricity, gas and water supplies to the building. Do we now have to pay more for these?

You refer to “the contract” and “the letter of intent”. Much depends on whether a contract has been entered into after the letter of intent or whether the letter of intent still governs the relationship. If the former, it is likely the letter of intent no longer has any contractual effect. For the contractor to be entitled to additional compensation it must show that your “instruction” is a compensation event. The contractor will doubtless argue that your instruction is one that changes the works information. Presumably, the employer's requirement relating to the hoisting equipment, electricity, gas and water supplies to the building was contained in part one of the contract data ? If so, it seems hard for the contractor to argue that your requirement that it carry out those works is a compensation event. Similarly, those items may be contained within the activity schedule. This would show that your requirement that they carry out this work is not a compensation event.

Matters may be different if the works are still governed by the letter of intent. If the “contractor’s proposals documents” referred to did not include the additional items, then it may be the case that the contractor is entitled to additional payment. The wording of the letter of intent will determine whether the contractor is entitled to a reasonable price (until a contract is entered into that sets out the mechanism for payment) or whether the letter of intent contains its own mechanism, or refers to the proposed contract documents, including the contract data.

Not enough notice

Under a JCT form, notices by the contractor were not made as required under the contract when it became “reasonably apparent” that progress would be delayed. Will delayed notices prove fatal to the contractor’s claims for loss and expense?

Clause 25 of the JCT forms requires the contractor to make an application for an extension of time “forthwith” if and whenever it becomes “reasonably apparent” that the progress of the works is being or is likely to be delayed. Clause 26 sets out the requirements for notice in relation to loss and expense due to causes within the architect’s or employer’s control and states that notice should be made “as soon as it has become … reasonably apparent” that progress will be materially affected. The JCT contracts do not address the implications of the contractor’s failure to provide timely notice.

Case law has, however, considered the importance of the contractors’ notices. It was held that a failure by the contractor to give notice did not affect the duty of the architect to grant an extension of time. If the architect was of the opinion that the works were likely to be delayed beyond the completion date, it must estimate the delay and make an appropriate extension as it owed a duty to the employer and the contractor.

Nevertheless, it has been found that a failure by the contractor to give notice was a breach of contract and this breach could be taken into account by the architect in making the extension of time.