Extensions Of Time

There are three key aspects to a building or engineering contract in connection with the timing of that project:

• The date for completion
• The mechanism for changing (extending) the date for completion
• The consequences for the parties of a failure to meet the date for completion

At the outset, particularly if a project includes works by a number of different contractors, the parties must agree a clear programme or programmes setting out when the different work packages should commence and complete. Without a clear programme, they will not be able to manage the project effectively and prevent delay or allocate the consequences of any delay.

Most building contracts and engineering contain express provision for completion of the works by a certain date. Even in the case of the simplest construction project, it is usually one of the few things that the parties make sure to agree on during their negotiations.

If the contract does not include a contractual date for completion, this does not mean that the contractor can take as much time as it likes. In these circumstances, Section 14 of the Supply of Goods and Services Act 1982 implies a term requiring the contractor to complete its works within a reasonable time:

“Where, under a contract for the supply of a service by a supplier acting in the course of business, the time for the service to be carried out is not fixed by the contract, left to be fixed in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the supplier will carry out the service within a reasonable time…”

What is “reasonable” is a question of fact in any given case. Delays will often occur on a project that are not the contractor’s fault or responsibility. For example, a delay may arise because the employer is unable to give the contractor possession of the site on time, or because the employer has instructed the contractor to carry out additional works (as a variation to the original scope of works.

If a delay event occurs that is the employer’s fault and the contract does not make provision for that delay, the original completion date falls away and time is put “at large”. This means the contractor is under an obligation to complete the works within a reasonable time.

Time at large results from the application of the “prevention principle”, which provides that no party may require the other to comply with a contractual obligation in circumstances where that party has itself prevented such compliance. If the employer has prevented the contractor from carrying out the works “on time” according to the original contractual completion date (and the contract does not provide for how that delay is dealt with), the employer cannot insist that the contractor meets the original date for completion.

There are two types of delay for which a contractor may be able to claim an extension of time: (a) Delay the employer caused and (b) Other delays that are not the contractor’s responsibility under the contract. The employer may have specific notification requirements, but the employer and/or the contract administrator may suspend or waive compliance with the contract’s notification requirements. They may do this expressly. Alternatively, a court may find that compliance with a contract term has been waived by silence or through the conduct of the parties. However, in practice, the parties rarely waive these notice requirements.

It is vital that the Contractor, knows the conditions precedent to make extension of time claims, under the contract, and that they adhere to these procedures, or they face the potential of losing the right to claim. Early legal advice is essential!

Acknowledgement: Thomson Reuters online resource Practical Law

NOT LEGAL ADVICE: Information provided in this Blog, is for information purposes only. It is not and should not be taken as legal advice. You should not relay on or take or fail to take any action based upon this information. Never disregard taking legal advice or delay in seeking legal advice because of something you have read in this blog, or on this website. Ian Randall is an Attorney & Counsellor at Law (NY), with 25 years of Corporate and Commercial experience in several jurisdictions. To see how Owllegal could help you, please visit; www.owllegal.org or email Ian Directly, his email address is ian@owllegal.org.