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Delay and Disruption - The Contractor's Obligations as to Time

Daniel Atkinson 18 November 2001


KEYWORDS: Delay and Disruption - The Contractor's Obligations as to Time, General Obligations as to Time, Obligation to Complete the Works, Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd[1990] 51BLR16, Pantland Hick v Raymond & Reid [1893], British Steel Corporation v Cleveland Bridge & Eng Co [1981] 24BLR100, Carr -v- J.A Berriman Pty Ltd (1953) 27ALJ273, Obligation to Progress the Works, GLC v Cleveland Bridge and Eng Co Ltd [1984] 34BLR50, West Faulkner Associates -v- The London Borough of Newham [1992] 71BLR6, Hounslow v Twickenham Garden Developments [1970] 7BLR89, Ascon Contracting Limited v Alfred McAlpine Construction Isle of man Ltd (1999), Pigott Foundations Ltd v Shepherd Construction Ltd (1993) 67BLR48, Serck Controls Ltd v Drake & Scull Engineering Ltd [2000], Express Terms of Standard Forms, FIDIC 1999, ICE 7th Edition, ECC 2nd Edition, MF/1Rev 4 2000 , IChemE Red Book 4th Edition 2001, JCT 1998 Forms, JCT 1998 With Contractors Design, JCT 1998 Prime Cost Contract, Intermediate Form of Contract 1998 , JCT 1998 Minor Form, CECA Blue Form, DOM/1,

General Obligations as to Time
Obligation to Complete
Obligation to Progress
Obligation as to Programme
EXPRESS TERMS OF STANDARD FORMS
FIDIC 1999
ICE 7 Ed
ECC 2 Ed
MF/1 Rev 4
IChemE Red
JCT 1998
JCT 1998 WCD
JCT 1998 PC
IFC 1998
JCT Minor
CECA Blue
DOM/1

 

SUMMARY
In modern construction contracts the contractor will usually have three separate but inter-related express obligations.
1.  The obligation to complete by a specified date or within a specified period.
2.  The obligation to progress the works regularly and diligently.
3.  The obligation as to programme.

Generally standard forms state the first two obligations, but there is no uniformity in the third.

 

1. General Obligations as to Time

The contractors obligations as to time will depend upon the express terms of the contract and on the terms implied as a matter of business efficacy. In modern construction contracts there are usually three separate but inter-related express obligations. If the three obligations are not stated expressly then similar terms will not necessarily be implied into the contract.

The first obligation is usually that the contractor shall complete by a specified date or a specified period, and possibly with stage or sectional completion obligations. In modern construction the obligation to complete by a date is of little assistance to an Employer or a contractor in a sub-contract in the management of the project. In most cases the Employer will wish action to be taken early to avoid late completion. This is the purpose of the second obligation in construction contracts. 

The second obligation is that the contractor shall progress the works regularly and diligently. In some sub-contract forms the Sub-Contractors obligation to progress the Sub-Contract Works is stated in terms that progress must be in accordance with the progress of the main contract works.

The third obligation relates to the means by which the Employer monitors progress and the implementation of corrective measures. The third obligation is that the contractor prepares and works to an accepted programme, updates the programme when actual progress differs from the programme and revises the programme to include corrective measures to mitigate the effects of delays.

The first two obligations are examined below. The third obligation is examined in the article Obligations as to Programme.

 

2. Obligation to Complete the Works

A construction contract will usually contain an express obligation to complete by a specified date or within a specified period. If a period is specified for completion then in order to fix the completion date, the commencement of the period must be clearly identified and established to avoid uncertainty. Some standard forms provide for the commencement date to be agreed after execution of the contract or failing that fixed by the Architect/Engineer. It should be clear whether or not periods of holiday or bank holiday are included, This is particularly relevant when extensions of time are granted. It should be clear what revised date has been fixed. Otherwise, confusion often arises on whether the extension of time is for calendar days or working days particularly when the working week is less than seven days.

If no date or period is specified then a term will be implied by the Supply of Goods and Services Act 1982 that the contractors obligation is to complete by a reasonable time. In a commercial contract the circumstances may require the implication of a term of completion by a fixed date to give business efficacy to the arrangement and to reflect the intention of the parties Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd[1990] 51BLR16.

What constitutes a reasonable time is a question of fact. The principles to be applied are those in Pantland Hick v Raymond & Reid [1893]. What constitutes a reasonable time has to be considered in relation to circumstances which existed at the time when the contract obligations are performed, but excluding circumstances which were under the control of the contractor. In British Steel Corporation v Cleveland Bridge & Eng Co [1981] 24BLR100 Lord Goff applied these principles by first considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control. Whether a reasonable time has been taken to do the works cannot be decided in advance, but only after the work has been done.

Where time is at large because the specified date no longer applies following an act of prevention or breach by the Employer, the original completion date is good evidence of what is a reasonable time in ordinary circumstances.

In Carr -v- J.A Berriman Pty Ltd (1953) 27ALJ273 it was held that if the contractors obligation to complete by a specified date is of the essence, then the Employer is released from further obligation if the contractor is in breach. He can treat the contract as repudiated. The Employer may instead elect not to exercise that right and continue to conduct himself in accordance with the contract. Time will no longer be of the essence. He may however give notice requiring performance within a reasonable time, making time of the essence again.

In general, obligations in construction contracts to complete by a specified date are not regarded as of the essence, except when clear express wording is used. It is suggested that extension of time clauses and provisions for liquidated damages would as a matter of interpretation prevent the obligation to complete in time being of the essence.

 

3. Obligation to Progress the Works

If the contract includes an express obligation for the contractor to complete by a specified date or within a specified period, then a term will not be implied that the contractor is to proceed regularly and diligently with the works. In the absence of a contrary intention, the contractor has the right to plan, execute and progress the works as he considers, provided he completes in accordance with the contract GLC v Cleveland Bridge and Eng Co Ltd [1984] 34BLR50. The Employer will be faced with severe evidential difficulties if he considers progress is too slow to ensure completion on time and wishes to take remedial action under the contract.

Many standard forms of contract include an express obligation for the contractor to proceed regularly and diligently with the works.

If the contractor does complete in time, but it can be shown that in breach of contract he has not proceeded regularly and diligently, then the Employer will have a remedy of substantial damages if he can establish a loss. The term "regularly and diligently" means to proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work West Faulkner Associates -v- The London Borough of Newham [1992] 71BLR6. If the contractor is well ahead with the works, he is not allowed to slow down so that the work is completed on time, if he is under an obligation to proceed regularly and diligently Hounslow v Twickenham Garden Developments [1970] 7BLR89.

In Ascon Contracting Limited v Alfred McAlpine Construction Isle of man Ltd (1999) Clause 11.1 required the Sub-Contractor to carry out and complete the Sub-Contract Works reasonably in accordance with the progress of the Main Contract Works. It was held relying on Pigott Foundations Ltd v Shepherd Construction Ltd (1993) 67BLR48 that the Sub-Contractor was not required to comply with the detail of the main contractors programme, either generally or in relation to the work of other specific sub-contractors. The Sub-Contractor was however to go somewhat beyond the negative duty not unreasonably to interfere with the actual carrying out of other works. The Sub-Contractor will know the nature of the main contract works and the place of the sub-contract works in them. The progress referred to in the obligation was that expected and observed, although the obligation was only to proceed reasonably in accordance with that progress. If the Sub-Contractor was in breach of that obligation and caused follow-on trades to be delayed, then the contractor would be entitled to recover any loss so caused.

In Serck Controls Ltd v Drake & Scull Engineering Ltd [2000] it was held that on the facts of the case the sum due to Serck was to be assessed by reference to what would be reasonable remuneration for executing the work of design and installation of a control system at a construction site. It was held that a firm working on a quantum meruit basis on a complex construction site could not wholly ignore the desirability of cooperation with others at work on the site. There was a duty at least not to unreasonably interfere with the carrying out of other works and more positively an obligation to be aware of the progress of other trades and, so far as consistent with the firms own legitimate commercial interests, to cooperate in efficient working practices. It was held that there was no breach by Serck of the qualified duty of cooperation to disentitle Serck from having its work valued on the basis of the circumstances in which they were carried out.

 

4.  Express Terms of Standard Forms

The standard forms make provision for both completion by specified dates or within specified periods and for the contractor to progress the works in an regular manner.

FIDIC 1999

Clause 8.2 Red, Yellow and Silver requires the contractor to complete the whole of the Works within the Time for Completion which is defined at Clause 1.1.3.3 as the time stated in the Appendix to Tender with any extension under Clause 8.4 calculated from the Commencement Date. The latter is defined at Clause 1.1.3.2 as the date notified under Clause 8.1. The express obligation is therefore to complete within a specified period. Clause 1.1.3.9 defines day as a calendar day and year as 365 days, but does not define week. It is suggested that in the context of the other definitions that week will mean seven calendar days unless expressly stated otherwise. It is suggested that periods should be defined in days not weeks and this is the approach adopted in the sample Appendix attached to the Form.

Clause 8.1 Red, Yellow and Silver requires the contractor to commence the execution of the Works as soon as is reasonably practicable after the Commencement Date and then to proceed with due expedition and without delay. Clause 8.3 requires the Contractor to proceed in accordance with the programme, subject to his other obligations under the Contract. Clause 15.2(c)(i) of the Red and Yellow Forms and Clause 15.2(c) of the Silver Form allows the Employer to terminate the Contract if the Contractor fails to proceed with the Works in accordance with Clause 8, without reasonable excuse, and subject to notice.

ICE 7th Edition

Clause 43 provides that the whole of the Works shall be substantially completed within the time stated in the Appendix to the Form of Tender, or such extended time under Clause 44 or 46(3). The contractors obligation is therefore to complete within a specified period. There is no definition of days or weeks.

Clause 41(2) requires the contractor to start the Works as soon as is reasonably practicable after the Works Commencement Date (defined in Clause 41(1) and then to proceed with due expedition and without delay in accordance with the contract. Clause 65(1) allows the Employer to expel the Contractor from site, if the Engineer has certified in writing to the Employer that despite previous warnings by the Engineer in writing, in his opinion the Contractor is failing to proceed with the works with due diligence.

ECC 2nd Edition

Core Clause 30.1 requires the contractor to do the work so that Completion is on or before the Completion Date which is defined at core Clause 11.2(12) as the date stated in the Works Information unless later changed in accordance with the contract. The contractors obligation is therefore to complete by a specified date.

Core Clause 20.1 states that the contractor is to Provide the Works in accordance with the Works Information. Unless the Works Information specifies how the contractor is to progress the Works, there is no express obligation to that effect. Control of the progress of the Works is by revisions of the Accepted Programme which is required to show the order and timing of operations which the contractor plans to do and the revisions show actual progress and how the contractor plans to deal with any delays. There is no default listed under core Clauses 95.2 or 95.3 which expressly refer to a failure to progress the Works. Reason R11 only refers generally to the contractors failure to comply with his obligations. The Employer has the right to terminate for any reason.

Clause 63.6 provides that assessments of compensation events are based on the assumption that the Contractor reacts competently and promptly to the compensation event.

MF/1Rev 4 2000

The Contractors obligation as to time is to complete within a period with the commencement of the period defined by fulfillment of certain obligations. Clause 13.1 and Clause 32.1 requires the Contractor to execute the Works and carry out the Tests on Completion within the Time for Completion which is defined at Clause 1.1.m as the period of time stated in the contract calculated from the later of three possibilities (a) to (c). Clause 1.1.m(a) is the date specified in the Contract as the date for commencement. Clause 1.1.m(b) is the date of receipt of advance payment specified in the contract. Clause 1.1.m(c) is the date when requirements stated as condition precedent in the contract have been fulfilled. Clause 1.1.cc defines day as calendar day. Clause 1.1.dd defines week as any period of seven days. Clause 1.1.ee defines month as calendar month.

Clause 13.1 requires the Contractor to execute the Works and carry out the Tests on Completion with due care and diligence. Clause 49.1 allows the Purchaser to give the Contractor 21 days notice of his intention to terminate the Contract enter the site and expel the Contractor, if despite previous warnings in writing from the Engineer the Contractor is failing to proceed with the Works with due diligence.

Under Clause 14.6 the Engineer has power to notify the Contractor if the Engineer decides that the rate of progress of the Works is too slow to meet the Time for Completion and that this is not due to a circumstance for which the Contractor is entitled to an extension of time. The Contractor is then required to take such steps as may be necessary and as the Engineer might approve to remedy or mitigate the likely delay, including revision of the Programme. The Contractor is not entitled to additional payment for taking such steps.

IChemE Red Book 4th Edition 2001

Clause 13.1 requires the Contractor to complete the construction of the Plant on the date or within the period specified in Schedule 11. Clause 2.5 defines day as calendar day. Under Clause 13.6 if the Project Manager decides that the rate of progress by the Contractor will prejudice his ability to complete in accordance with Clause 13.1, and this is due to a cause for which the Contractor is responsible, the Project Manager has power to give notice to that effect. The Contractor must then use his best endeavours to remedy the potential delay at his own cost. Such action does not affect the Contractors liability to pay damages for delayed completion (Clause 13.8).

Clause 43.2(b) gives the Project Manager power to issue a notice that the Contractor is in default by failing to proceed regularly and diligently with the Works. If the Contractor fails to commence and diligently pursue the rectification of such default within 14 days after receipt of the notice, the Purchaser may by notice terminate the employment of the Contractor under the Contract.

JCT 1998 Forms

Clause 1.3 of the JCT 1998 Form defines the Date for Completion as the date stated in the Appendix. Under Clause 23.1.1 the Contractor is required to complete on or before the Completion Date. Clause 25 provides for the Contractor to be granted extension of time for Relevant Events, but importantly Clause 25.3.4.1 requires the Contractor to use constantly his best endeavours to prevent delay in the progress of the Works, however caused, and to prevent the completion of the Works being delayed or further delayed beyond the Completion Date. Clause 1.8 defines the reckoning of periods of days for act are required to be done within a specified period of days, but otherwise there is no definition of days or weeks.

Under Clause 23.1.1 the Contractor is required to regularly and diligently proceed with the Works. Clause 25.3.4.2 requires the Contractor to do all that may be reasonably required to the satisfaction of the Architect to proceed with the Works. Clause 27.2.1.2 allows the Architect to give notice of default if before the date of Practical Completion the Contractor fails to proceed regularly and diligently with the Works. If the Contractor continues the default for 14 days from receipt of the notice, the Employer may within 10 days after the expiry of 14 days give notice determining the employment of the Contractor. If the Employers notice is not issued, then if the Contractor repeats the default then upon or within a reasonable time after such repetition, the Employer may give notice determining the Contractors employment, taking effect on the date of receipt of the notice.

JCT 1998 With Contractors Design

JCT 1998 With Contractors Design is in similar terms to JCT 1998 and similar considerations apply, except that the Employer administers the contract instead of the Architect under JCT 1998.

JCT 1998 Prime Cost Contract

The JCT 1998 Prime Cost Contract is similar in structure to the JCT 1998 Form and similar considerations apply.

Under Clause 2.1.1 the Contractor is required to regularly and diligently proceed with the Works and complete on or before the Completion Date. Clause 2.5 provides for the Contractor to be granted extension of time for Relevant Events, but importantly Clause 2.5.4 requires the Contractor to use constantly his best endeavours to prevent delay in the progress of the Works, however caused. Further, Clause 2.5.4 requires the Contractor to do all that may be reasonably required to the satisfaction of the Architect to proceed with the Works. Clause 2.5.5 requires the Contractor to review the progress of the Works whenever the Architect considers it reasonably necessary which review includes consideration of additional resources required to maintain progress for which the cost would be included in the Prime Cost.

Clause 7.2.1 allows the Architect to give notice of default if before the date of Practical Completion the Contractor fails to proceed regularly and diligently with the Works. If the Contractor continues the default for 14 days from receipt of the notice, the Employer may within 10 days after the expiry of 14 days give notice determining the employment of the Contractor. If the Employers notice is not issued, then if the Contractor repeats the default then upon or within a reasonable time after such repetition, the Employer may give notice determining the Contractors employment, taking effect on the date of receipt of the notice.

Intermediate Form of Contract 1998

The IFC 1998 is similar in structure to the JCT 1998 Form and similar considerations apply. Clause 2.1 requires the contractor to complete by the Date for Completion stated in the Appendix. Under Clause 2.1. the Contractor is required to regularly and diligently proceed with the Works and complete on or before the Completion Date. Clause 2.3 provides for the Contractor to be granted extension of time for specified events, but importantly the Contractor is required to use constantly his best endeavours to prevent delay and to do all that may be reasonably required to the satisfaction of the Architect to proceed with the Works.

Clause 7.2.1 allows the Architect to give notice of default if before the date of Practical Completion the Contractor fails to proceed regularly and diligently with the Works. If the Contractor continues the default for 14 days from receipt of the notice, the Employer may within 10 days after the expiry of 14 days give notice determining the employment of the Contractor. If the Employers notice is not issued, then if the Contractor repeats the default then upon or within a reasonable time after such repetition, the Employer may give notice determining the Contractors employment, taking effect on the date of receipt of the notice.

JCT 1998 Minor Form

Clause 2.1 requires the Contractor to complete the Works by a specified date. Clause 1.1 requires the Contractor to carry out and complete the Works with due diligence. Clause 7.2.1 allows the Architect to give notice of default if the Contractor fails to proceed diligently with the Works. If the Contractor continues the default for 7 days from receipt of the notice, the Employer may give further notice determining the employment of the Contractor.

CECA Blue Form

Clause 6(1) requires the Subcontractor to complete within the Period for Completion specified in the Third Schedule. The commencement of the period is not clear, whether it is the date of the Contractors instruction under Clause 6(1) or the date the Sub-Contractor enters the Site and commences the execution of the Sub-Contract Works. It is suggested that the proper interpretation of Clause 6(1) is that the commencement of the period is the agreed date of commencement or, if not agreed, the date of commencement if this is within 10 days of the Contractors instruction, otherwise the date 10 days from the Contractors instruction to commence.

Clause 6(1) requires the Subcontractor to proceed with the Subcontract Works with due diligence and without delay except as expressly sanctioned or ordered by the Contractor or as may be wholly beyond the control of the Subcontractor. Clause 17(1)(b) allows the Contractor by written notice to determine the Subcontractors employment if the Subcontractor fails to proceed with due diligence after being required in writing to do so by the Contractor.

Under Clause 3(1) the Sub-Contractor is deemed to have full knowledge of the Main Contract. Under Clause 3(2) the Sub-Contractor is required to carry out his obligations so as not to cause or contribute to any breach by the Contractor of any of his obligations under the Main Contract.

DOM/1

Clause 11.1 of DOM/1 requires the subcontractor to complete the Subcontract Works in accordance with the details in Appendix Part 4 which provides for insertion of the notice period to commence work on site, the range of dates for the date of commencement and the period for carrying out and completing the Sub-Contract Works. The obligation is subject to receipt of notice to commence work on site in accordance with Appendix Part 4

Clause 11.1 of DOM/1 requires the subcontractor to complete the Subcontract Works reasonably in accordance with the progress of the Works. The Subcontractors entitlement to extension of time is subject to the proviso in Clause 11.8 which requires the Subcontractor to use his best endeavours to prevent delay in the progress of the Subcontract Works however caused and to prevent any such delay resulting in the completion of the Subcontract Works being delayed beyond the period for completion. The Subcontractor is required to do all that may be reasonably required to the satisfaction of the Architect and the Contractor to proceed with the Subcontract Works.

Clause 29.2.1.2 allows the Contractor to give notice of default if before the date of Practical Completion the Subcontractor fails to proceed regularly and diligently with the Subcontract Works. If the Contractor continues the default for 10 days from receipt of the notice, the Contractor may within 10 days after the expiry of 10 days give notice determining the employment of the Subcontractor. If the Contractors notice is not issued, then if the Subcontractor repeats the default then upon or within a reasonable time after such repetition, the Contractor may give notice determining the Contractors employment, taking effect on the date of receipt of the notice.