Extension of Time and Additional Payments in Contracts
Published at : September 21, 2021
Introduction
In the construction it is common that project takes longer time than allowed in the Contract. This is due to so many reasons. If the delay is the fault of the Contractor then a sum of money per day is charged to the Contractor. If the delay is nobody’s fault then the risk is taken by the Employer. If the delay is owing to the Employer’s agents, then subject to notice and substantiations the Contractor given an extensions of time and associated costs.
Contractual Position
One of the main reason of having an Extension of time Clause is to keep alive the Employer’s right to deduct liquidated damages. If there is no extension of time provision which deals with the delays caused by Employer or his agents the liquidated damages Clause will be held to be invalid. Peak Construction(Liverpool) Ltd. Vs McKinney Foundations (1976) 1 BLR 111.
This necessary requirement of an effective extension of time Clause will not satisfied by a general expression such as :
“ Other special circumstances of any kind “
“ circumstances wholly beyond the control of the Contractor”
Such terms will not permit the Employer to cause delay without prejudicing his right to deduct liquidated damages. Peak Construction(Liverpool) Ltd Vs McKinney Foundations (1970) 1 BLR114
Extension of time Clauses usually also include delays for which the Contractor or sub Contractor would normally be liable comprising:
Delays which are within the control of or are the responsibility of the Contractor. e.g.Failure to obtain goods or materials
Delays which are within the control of neither party: e.g Force majeure or exceptionally bad weather conditions.
Extension of time provisions in sub Contracts usually give the sub Contractor similar rights to extension of time as the main Contractor.
Additional Costs owing to extension
Claims for additional payments are sometimes grouped together in one Clause.
For example JCT 80 in Clause26 deals with loss and expense resulting from a delay to the progress of the works. Usually this type of Clause contain two distinct types
Loss and expenses or additional costs resulting from default by the Employer such as late possession or access and interference by persons employed directly by the Employer.
Loss and expenses or additional cost resulting from default on the part of Architect, Engineer such as late issue of drawings and other instructions.
Model Form MF/1 provides under Clause 41.2 a comprehensive list of matters which give rise to the Contractor’s right to claim extra payment. Contracts as ICE 5th and 6th Editions do not have a comprehensive claims Clause. Entitlements to additional payment occur in various Clauses within the conditions.
All standard forms of Contract include a procedure relating to granting of extension of time. This usually include:
The submission of initial notice regarding the delay
Submission of back details to support the initial claim
Further details to keep up to date the information previously submitted.
Some Contracts stipulates time limits with in which these submissions are to be made.
Legal precedents
Temloc Ltd. Vs Errill properties Ltd. (1987) 39 BLR 34
It has been held in court decisions that a failure on the part of the Contractor to comply with the Contractual requirements as to notice will not necessary lose the right to an extension of time.
London Borough of Merton Vs Stanley Hugh Leach (1985) 32 BLR 51
Where the Contract condition state that the service of notice is a condition precedent then lack of the notice will lose the contractor or sub contractor his rights. Eg : GC Works/1 Edition 2 and FCEC Blue Form of sub contract. Bremer Handelsgesellshaft MBH Vs Vanden Avenne-Izegem (1978)
Extension of time under Dubai Municipality Contract
Clause 44 of the Dubai Municipality condition deals with extension of time. The grounds of extensions included in the Clause are
The amount or the nature of extra work or additional work
This Includes
Variations issued under Clause 51
Additional work resulting from re measurement
Instructions given in accordance with Clause 12
Any cause of delay referred to in the condition
Submitted the Engineer detailed particulars within 28 days of notice in order that may be investigated at the time.
The Engineer has to grant an extension of time as is fair after consultation with the Employer and Contractor and is to notify both Employer and Contract
No final review shall result in a decrease of any extension of time already determined.
Technical Auditor’s role
The Technical Auditor’s role in evaluating the entitlements of the Contractor is to first concentrate on the Conditions of Contract. The same is intention of the parties before the Contract is signed. Then comes the Notices, details of entitlement etc. Spirit of the Contract that all parties act to keep the damage to minimum. Technical Auditor should be fair and never allow a party for any unjust enrichment.
In the construction it is common that project takes longer time than allowed in the Contract. This is due to so many reasons. If the delay is the fault of the Contractor then a sum of money per day is charged to the Contractor. If the delay is nobody’s fault then the risk is taken by the Employer. If the delay is owing to the Employer’s agents, then subject to notice and substantiations the Contractor given an extensions of time and associated costs.
Contractual Position
One of the main reason of having an Extension of time Clause is to keep alive the Employer’s right to deduct liquidated damages. If there is no extension of time provision which deals with the delays caused by Employer or his agents the liquidated damages Clause will be held to be invalid. Peak Construction(Liverpool) Ltd. Vs McKinney Foundations (1976) 1 BLR 111.
This necessary requirement of an effective extension of time Clause will not satisfied by a general expression such as :
“ Other special circumstances of any kind “
“ circumstances wholly beyond the control of the Contractor”
Such terms will not permit the Employer to cause delay without prejudicing his right to deduct liquidated damages. Peak Construction(Liverpool) Ltd Vs McKinney Foundations (1970) 1 BLR114
Extension of time Clauses usually also include delays for which the Contractor or sub Contractor would normally be liable comprising:
Delays which are within the control of or are the responsibility of the Contractor. e.g.Failure to obtain goods or materials
Delays which are within the control of neither party: e.g Force majeure or exceptionally bad weather conditions.
Extension of time provisions in sub Contracts usually give the sub Contractor similar rights to extension of time as the main Contractor.
Additional Costs owing to extension
Claims for additional payments are sometimes grouped together in one Clause.
For example JCT 80 in Clause26 deals with loss and expense resulting from a delay to the progress of the works. Usually this type of Clause contain two distinct types
Loss and expenses or additional costs resulting from default by the Employer such as late possession or access and interference by persons employed directly by the Employer.
Loss and expenses or additional cost resulting from default on the part of Architect, Engineer such as late issue of drawings and other instructions.
Model Form MF/1 provides under Clause 41.2 a comprehensive list of matters which give rise to the Contractor’s right to claim extra payment. Contracts as ICE 5th and 6th Editions do not have a comprehensive claims Clause. Entitlements to additional payment occur in various Clauses within the conditions.
All standard forms of Contract include a procedure relating to granting of extension of time. This usually include:
The submission of initial notice regarding the delay
Submission of back details to support the initial claim
Further details to keep up to date the information previously submitted.
Some Contracts stipulates time limits with in which these submissions are to be made.
Legal precedents
Temloc Ltd. Vs Errill properties Ltd. (1987) 39 BLR 34
It has been held in court decisions that a failure on the part of the Contractor to comply with the Contractual requirements as to notice will not necessary lose the right to an extension of time.
London Borough of Merton Vs Stanley Hugh Leach (1985) 32 BLR 51
Where the Contract condition state that the service of notice is a condition precedent then lack of the notice will lose the contractor or sub contractor his rights. Eg : GC Works/1 Edition 2 and FCEC Blue Form of sub contract. Bremer Handelsgesellshaft MBH Vs Vanden Avenne-Izegem (1978)
Extension of time under Dubai Municipality Contract
Clause 44 of the Dubai Municipality condition deals with extension of time. The grounds of extensions included in the Clause are
The amount or the nature of extra work or additional work
This Includes
Variations issued under Clause 51
Additional work resulting from re measurement
Instructions given in accordance with Clause 12
Any cause of delay referred to in the condition
Submitted the Engineer detailed particulars within 28 days of notice in order that may be investigated at the time.
The Engineer has to grant an extension of time as is fair after consultation with the Employer and Contractor and is to notify both Employer and Contract
No final review shall result in a decrease of any extension of time already determined.
Technical Auditor’s role
The Technical Auditor’s role in evaluating the entitlements of the Contractor is to first concentrate on the Conditions of Contract. The same is intention of the parties before the Contract is signed. Then comes the Notices, details of entitlement etc. Spirit of the Contract that all parties act to keep the damage to minimum. Technical Auditor should be fair and never allow a party for any unjust enrichment.
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