Messing with Time

When delay occurs on a construction project the cause of delay is either an event for which the Contractor is responsible, one for which the Employer is responsible, or due to factors which are beyond either partys control. This third class of causation of delay is said to be neutral in terms of causation simply because it is a delay that neither the Employer nor the Contractor is responsible for having caused.
 
 

When delay occurs on a construction project the cause of delay is either an event for which the Contractor is responsible, one for which the Employer is responsible, or due to factors which are beyond either party’s control.  This third class of causation of delay is said to be neutral in terms of causation simply because it is a delay that neither the Employer nor the Contractor is responsible for having caused.

 
Standard forms of construction contract invariably include a number of features with respect to the obligation to complete the contract works by a given date.  These will often include a date of possession, a period for the works and/or a completion date together with a requirement for the Contractor to pay agreed damages to the Employer in an amount expressed as a sum payable per day or per week if the contract completion date is not achieved - commonly known as liquidated damages.
 
Most construction contracts contain a mechanism for deferring the date for completion or extending the period for completion where certain defined events have caused delay.  You would have thought that these extensions of time principles were a well known and understood feature of contracting in the UK but of late I have been looking at a number of amended contracts which make me wonder.
 
The fact is that there is an increasing trend for Employers and their advisors to amend the provisions and circumstances under which Contractors can claim an extension of time.  This can only be because there is the belief that in doing so risk is transferred from the Employer to the Contractor.  This might be possible with causes of delay which are from neutral causes, but if an attempt is made to delete a Contractor’s right to an EOT where the Employer is responsible for delay the Employer could be doing a great job of shooting himself in the foot.
 
Getting back to basics - if the Employer or its Agent is responsible for causing a delay to the progress of the works, what we often refer to as an “act of prevention” - meaning that the Employer has prevented the Contractor from finishing on time, there has to be a mechanism for extending the date for completion.  Without this mechanism if a delay occurs because of an “act of prevention”, time is said to become at large and the only remaining obligation on the Contractor, with respect to time, is that it completes its work within a reasonable period.  In such circumstances the Employer would lose its right to deduct damages unless it can prove that the Contractor has failed to complete within a reasonable time.
The delay caused by such an “act of prevention” need not be for a substantial period and even a delay of a single day will be sufficient to cause time to become at large.
 
So in practice, rather than the Contractor having the burden of proving that it is entitled to an extension of time to avoid paying liquidated damages, the Employer now has the burden of proving that the Contractor has failed to complete in a ‘reasonable period’ rather than the fixed strict time periods the Contractor originally signed up to.
 
What is a ‘reasonable period’ is one of those questions that has lawyers reaching for their worry beads.  What it certainly is not, is the period set down in the parties’ contract and when the Courts set about determining this reasonable period, because this is probably where you are heading next, such factors as the
 
Contractor’s commitments, availability of materials and labour and all such matters which a Contractor might ordinarily have to accept responsibility for will now have to be taken into account.
 
So the moral of this story has to be that if you are going to tinker with the extension of time provisions of standard forms in the hope of transferring risk to a Contractor you might be in for a nasty shock.
 
Peter Vinden is a practising adjudicator, mediator, expert and conciliator. He is Joint Managing Director and Chairman of Vinden and he be contacted by email at pvinden@vinden.co.uk
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