Delayed gratification

Whatever the legal theorists say about money claims being independent of awards of extensions of time, the fact is that in building contracts, as in life, time is money.

Extensions of time are a problem area where difficult concepts such as concurrent delays have to be grappled with. Why is it that these and other mysteries, such as "float time", have been so little explored in the standard form contracts? Why do we not have in JCT98 a clear indication of how concurrent delays should be approached by the contract administrator?

Developers' lawyers frequently try to address this issue in bespoke contracts. An amendment may be made to clause 25 of JCT98, stating that any delay caused by a relevant event, which is concurrent with another delay for which the contractor is responsible, shall not be taken into account. Such a provision reverses the rule that would otherwise apply, namely that if there are two simultaneous causes of delay, one a relevant event and the other not, then the contractor is entitled to an extension.

Amendments of this kind may be dangerous for client and contractor. As far as the contractor is concerned, the contract administrator is strongly encouraged by such a provision to go looking for an element of contractor delay that might remove the need to grant an extension. As far as the employer is concerned, there is the risk that such a provision may deprive the contract administrator of the right to extend time because of client default (which we must assume for this purpose is of equivalent causative strength as the contractor's delay). In this case, the common law may mean that time becomes "at large" and liquidated damages are no longer claimable. That would be a high price to pay for a clause designed to protect the employer's interests.

The common law may mean that time becomes ‘at large’ and liquidated damages are no longer claimable

Sometimes, such a clause is accompanied by an equivalent amendment to clause 26 preventing a claim for loss and expense where one of the "relevant matters" has occurred accompanied by a concurrent delay due to contractor default. Such a provision would not, of course, prevent a claim for loss and expense due to disruption, nor would it prevent a claim for damages for breach of contract if delay by the client could be shown to have caused loss. All the clause appears to do is to prevent a claim for loss and expense in this situation being certified during the course of the works.

Those who believe that good project management requires claims to be dealt with during the course of the works, and not preserved for a "rolled up" claim at the end of the project, maintain that two requirements must be introduced to the contract. Firstly, the contractor must be obliged to give an early indication of a possible claim so that it can be investigated and, if possible, pre-emptive measures taken. That suggests that a clear timetable must be introduced to alert the contract administrator to the event in question. In MF/1, for example, it is perfectly clear that contractors' claims, if not notified within 30 days from the date the contractor became aware of circumstances entitling him to claim, cannot be pursued at a later date. This is the exact opposite of the position under the JCT contract. Is that harsh on the contractor? Arguably it is not, provided that the period is a reasonable one and begins to run from the contractor's awareness of a delay situation. After all, if you know you have a claim, it is reasonable to expect you to tell the contract administrator.

The second step involves removal of the fallback right to claim for common law damages over and above any contractual entitlement. On this approach, the claims clause becomes an exclusive statement of the contractor's rights and it cannot come back for a second bite of the cherry. If the contract administrator fails to deal with the claim, or gives a decision that the contractor finds unacceptable, then the contractor can go to adjudication.