Is it true that the client
cannot deduct liquidated damages unless he can prove he has incurred them?
No.
Providing the weekly rate of damages was a reasonable estimate at the time
the contract was entered into, then the Client can deduct them regardless.
What about the contractor? Must
he show that he has incurred damages or costs before he sets them off against
the sub-contractor’s account?
Yes, under most standard forms of
sub-contract, such as Dom/1. However, be aware that many contractors are
inserting a clause which gives them the right to set off estimated future
costs. You should always try to get clauses like this deleted at the outset.
If a contractor issues the sub-contractor
with a revised programme putting the end date back, does this give the
sub-contractor an automatic extension of time?
No. This is a common mistake. You should analyse the programme and
identify the factors which have caused the slippage, then apply for extension
of time stating the reasons (ie the effects upon the progress of the
sub-contract works). If you have a copy
of the original project programme, you will be able to identify the delays in
erection of roof, walls, ceilings, partitions etc. This will be strong evidence to help you if the contractor
accuses you of causing delay to project completion.
Is a contractor right to refuse the sub-contractor an extension of
time on the grounds that the architect
has refused to grant an extension to the main contract?
No. Under the standard forms such as
Dom/1, the sub-contractor’s entitlements stand to be judged irrespective of the
contractor’s position under the main contract.
For instance, the contractor may
have been guilty of “slow” building, which would give him no entitlement under
the main contract. However, the sub-contractor may well be entitled to
extension under the sub-contract.
Beware of contractors who insert a clause which restricts the
sub-contractor’s rights to benefits arising under the main contract.
What if the main reason for
delay is lack of building progress and/or access?
Under most standard forms, the
sub-contractor would have entitlements due to the “act, omission or default” of
the contractor. Again, beware contractors
who omit any such clause from their sub-contract conditions.
Is it enough for a
sub-contractor to give “lack of building progress” as the reason for delay?
No. It is essential to give reasons for
the alleged delays (eg incomplete roof to restaurant, lack of internal walls to
basement etc). The sub-contractor should also state the precise effect on the
sub-contract progress (eg delayed start to first fix in restaurant etc). If
there is likely to be a delay to overall completion, this must be notified
immediately it becomes apparent. This is only fair to the client and contractor, who may be able
to take actions to assist progress (eg making alternative work faces available
etc).
Do site minutes qualify as a
delay notice?
No.
It is a naïve sub-contractor who relies upon the minutes of a site
meeting as a substitute for a proper written delay notice. In any case, the minutes are usually written
by the contractor, and often show considerable bias, not to say distortion.
If a contractor declines to
award an extension of time, and the sub-contractor has to work overtime and/or
increase his labour force, can he recover the costs at the end of the job as an
“enforced acceleration”?
The main JCT forms and associated
sub-contracts make no provision for acceleration. Even if they do, it is a
matter to be agreed before putting the measures in hand. The sub-contractor should emphasise his
entitlements to extension, pointing to his notices and records as
justification, then by all means put forward proposals for “special measures”
and the precise method of reimbursement.
These should be accompanied by provisos regarding timely access,
information etc. However, it is
essential to secure written agreement before embarking on any major acceleration.
Can a sub-contractor be entitled
to prolongation costs before the original sub-contract end date has
passed?
Delays can occur during the progress of
the sub-contract works which do not necessarily require extension of the end
date. Most services sub-contractors allow a period of several weeks at the end
of the programme for “commissioning only”. Only a residual staff would be required for this. If legitimate delays
lead to reduction of this period, then the sub-contractor may well have to retain a full staff on site
until the completion date. In such a case, there may well be a legitimate right
to prolongation costs (ie the difference between the planned “commissioning”
staff and the actual job staff).
BI-MONTHLY SERIES
ARTICLE NO 5 DATED 30/9/01
John
Russell
Contracts
and Training Consultant
Cheshire CW4 7DP
Tel:
07770 986444
Email: swsubbie@globalnet.co.uk
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