there is a danger that the employer will be unwilling to pay for the works carried out in excess of the financial limit.
There is no date agreed for completion of the works. Can the contractor take as long as he likes? Parties usually agree on a completion date for the works at an early stage, but sometimes works start on site beforehand and from time to time parties simply forget to specify the agreed completion date in the relevant contract schedule. The law provides in the absence of an agreed completion date, works must be completed within a reasonable time.
Payment for additional or different work Sometimes an employer instructs a change to the scope of works under the contract. To demonstrate an entitlement to further payment, the contractor must show that the change falls outside the original scope of works and that the employer has expressly or impliedly agreed to pay for it. Disagreements often arise where the scope of works is poorly defined.
To avoid this pitfall a contractor should not carry out any instruction which it believes falls outside of the original scope of works without following the contract variation procedure, or where the parties have not agreed one, obtaining the written agreement of the employer first.
Defective work Defective work is generally work that has been carried out poorly in breach of contract, but
work can be defective simply because it fails to meet the specification for the works. There are different types of defects: de minimus - commonly known as ‘snagging’; patent - apparent on inspection either before or during a specified period after practical completion (the ‘Rectification Period’); or latent - which by their nature are concealed and may not materialise for many years.
Defects are usually remedied during the course of a contract and most Standard Form Contracts include a Rectification Period after practical completion in which the contractor is obliged to return to site to remedy defects if requested. Practical completion means completion of all of the construction work. As a matter of good practice therefore practical completion should not be certified if patent defects exist.
Sometimes an employer is keen to move into a property before practical completion has been certified. Practical completion is then deemed to have occurred even in the presence of outstanding works. An employer can find itself put to additional cost in the completion of the outstanding works, particularly if it is obliged to employ another contractor to complete them and insufficient monies have been retained to cover such costs. To reduce this risk, prior to possession being taken, the architect should obtain a written undertaking from the contractor to complete the outstanding works by an agreed date.
The end of a Rectification Period does not
release a contractor from liability for defects. Liability extends until the end of the limitation period in which a breach of contract claim can be brought. In Jersey this is 10 years from the date on which the breach of contract occurs.
What to do about delay? Delay can be caused by a variety of factors such as bad weather or labour shortages. Where the contractor is not culpable, the architect may grant the contractor an extension of time (commensurate to the period of delay) in which to complete the works. In the case of contractor default the employer’s remedy is usually in damages for any loss and expense suffered.
I am sometimes asked if a contract can be terminated on the grounds of contractor delay. This remedy is only available where the parties have agreed that the terms as to time and completion of the works shall be complied with strictly. Wrongful termination can lead to a claim in damages from a contractor.
In summary, construction contracts provide a means of safeguarding the performance of both parties’ obligations and ensuring that the risks associated with a project are properly regulated from the outset.
At Ogier we have the expertise and experience to provide you with legal advice from the planning stages of any project, through the construction phase and if necessary on the resolution of any disputes which may arise. For futher information please contact Emelita on 01534 753966.
Understanding your local Channel Islands’ business landscape. It’s in our nature.
The qualities you need in a local law firm come naturally to us. We provide a broad range of integrated pan-island legal services, with a pragmatic, commercial approach, and we are focused on delivering outstanding client service.
To find out how we can assist your business, please contact: Jonathan Hughes on +44 1534 504336 or Caroline Chan on +44 1481 752215
ogier.com/cilegal Information on Ogier Group and details of its regulators can be accessed via our website
www.ogier.com.
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