When something happens on the project that causes additional costs to be incurred, whether it be
- a direction to undertake a variation;
- events that delay the progress of the works; or
- the discovery of latent conditions that were not evident prior to tender,
Dark Legal will take all steps to ensure that our clients are adequately compensated for these additional costs. Alternatively, if our client is the principal or head contractor, we are experienced in defending these claims and negotiating satisfactory outcomes that will keep the project on its feet.
No matter what triggers a variation to the building contract, it is imperative that the variations are documented and the notice provisions under the contract are strictly complied with to avoid any entitlement disputes.
If the parties do not, for one reason or another, comply with the requirements for entitlement to payment for variations under the contract and they are subsequently denied payment, they may (in limited circumstances) still have a quantum meruit claim for payment of the value of the works (restrained by the contract price if applicable).
There are almost always site conditions that are not visible during the first inspection or events that occur that are outside the control of the parties.
Common examples of latent condition claims include:
- soil contamination;
- hidden services; and
- asbestos.
Whether the events that occur that are outside of the control of the parties are in fact latent conditions will depend upon the provisions contained in the contract. To ensure that the contract protects your interests, we encourage you to seek legal advice during the contract negotiation and preparation stage.
Risk allocation for loss and damage arising from either delay or disruption to a project is usually provided for under the construction contract. Delays not caused by the party undertaking the works will usually entitle them to successfully claim an extension of time (EOT) to the date for practical completion and potentially delay damages under the contract. It is likely however that strict time bars with respect to the notification of delays, EOT claims and delay damages will apply under the contract.
Dark Legal are passionate about educating our clients and setting them up with the tools to ensure their success. We understand that when a contract is under financial and time pressures, contract administrators and project managers are time poor and focussed on completing the project, which can lead to poor contract management.
Accordingly, we encourage our clients to seek our advice during contract negotiations and take advantage of our offer to implement internal procedures once the contract has been executed. We are happy to provide you with notice precedents, simplified contract guides for circulation within your organisation and other internal processes to reduce the likelihood of you or your employees failing to issue notices within the time periods under the contract and potentially affecting your entitlement to time-related claims.
In circumstances where the works are not completed by the date for practical completion (as adjusted by any EOTs that have been granted), the construction contract may provide that the Principal is entitled to claim an amount of liquidated damages (LDs) for the delay in completion of the project.
Consideration must be had to the nature and quantification of the LDs, to determine whether the relevant clause is a penalty and therefore unenforceable. Essentially, the quantum of any LDs should be a genuine estimate (at the time the contract was entered into) of the loss that would result from the breach. If not, the LDs clause in the contract will be deemed to be a penalty which punishes a party by requiring them to pay a sum that is unconscionable or unproportionate to the loss that would have been suffered, and is therefore void and unenforceable.
Once again, carefully drafted contracts are crucial to reduce the probability of costly litigation with respect to the enforceability of LDs. Having said that, parties to even the most carefully drafted contracts can find themselves in dispute with respect to whether an event is a qualifying cause of delay or whether a LDs clause is valid.
If you find yourself in a dispute at the end of the contract where the principal is claiming entitlement to LDs, you should engage lawyers as soon as possible to avoid them having recourse to any security and to otherwise protect your position under the contract and at law.
