CONSTRUCTION LAW

Construction Law

Construction Law

Referring to the scenario of Morrissey & Marr In these harsh times, a number of difficult situations may arise. This talk considers two of them by reference to the SBC/Q form and recent case law: (1) The Employer fails to pay sums properly due to the Contractor; (2) The Contractor becomes insolvent. 2. Of course, in either situation the innocent party may wish to continue with the Contract. But more likely is the scenario where this party wishes to determine, and cut its losses. Employer fails to pay 3. Clause 8.9 of SBC/Q provides so far as relevant. (Latham, Sir M., 2004,)Pp. 19.)

If the Employer: .1 does not pay by the final date for payment the amount properly due to the Contractor in respect of any certificate and/or any VAT properly chargeable on that amount; or … the Contractor may give to the Employer a notice specifying the default or defaults (the 'specified default or defaults. If a specified default or a specified suspension event continues for 14 days from the receipt of notice under clause 8.9.1 or 8.9.2, the Contractor may on, or within 10 days from, the expiry of that 14 day period by a further notice to the Employer terminate the Contractor's employment under this Contract. .4 If the Contractor for any reason does not give the further notice referred to in clause 8.9.3, but (whether previously repeated or not): .1 the Employer repeats a specified default; ... then, upon or within a reasonable time after such repetition, the Contractor may by notice to the Employer terminate the Contractor's employment under this Contract.” 4. So the scheme (which has been in the JCT contracts for long time) is: (1) Failure to pay by the final date for payment; (2) Notice of default; (3) If default continues for 14 days, the Contractor has 10 days in which to give notice to terminate; (4) If default repeated, then, within a reasonable time, the Contractor may terminate the Contract. 5. Note (Clause 8.2.1) that notice of termination “shall not be given unreasonably or vexatiously… McCaffery, R.G., etal, The Civil Engineering Standard Method of Measurement in Practice. (Granada Pp. 90.)

In Reinwood Ltd v L Brown & Sons Ltd these provisions (albeit in the 1998 form) came under scrutiny. 2 7. The facts were: 14.12.05 Architect issued Certificate of Non-Completion. 11.1.06 Architect issued Interim Certificate showing £187,988 due. 17.1.06 Employer: (1) Issued Clause 24.2 Notice of Intention to deduct LADs from 14.12.05. (2) Gave notice under clause 30.1.1.3 of intention to pay only £126,359 i.e. a deduction of £61,629 for LADs. 20.1.06 £126,359 paid. 23.1.06 EOT granted to 10.1.06 25.1.06 Final date for payment 26.1.06 Notice of default given, on basis that due to EOT Employer only entitled to deduct £12,326 for LADs. 28.6.06 Final date for payment of £39,981 under further Interim Certificate. 3 5.7.06 Notice of termination given. 6.7.06 £39,981 paid. 8. At first instance ([2007] BLR 10), HHJ Gilliland upheld the validity of the ...