Extension of time and Liquidated Damages Flashcards
What is an extension of time?
A mechanism in the contract that allows an employer to extend the time in the contract by which the contractor is required to complete works.
What is EOT short for?
Extension of time
What type of construction contracts have EOTs
The JCT suite
There are conditions that can triger EOTs. What is this term called?
Relevant Events
What is a relevant event?
A defined event set out in a JCT contract that will trigger an EOT
When is an extension of time triggered?
when a relevant event happens
Under JCT when is a contractor bound to advise the client of a relevant events impact and effect?
Whenever reasonable and apparent - though its uncelar what recourse is available if they dont.
What would happen if a relevant event happened (a delay not that isnt the contracts fault or owned risk) and there was no extension of time facility within the contract?
The completion date would change to time at large
What is time at large?
Completion within reasonable time
What are the impacts of a contract completion date becomeing time at large
The client is no longer entitield to liquidated damages and delay damages become more ambiguous with no specific date of completion.
Who confirms an EOT after the contractor sends notification?
The CA or EA - as soon as possible and absoloutly within 12 weeks.
Can the CA/EA retrospectivly bring a previously extened completion date back so that it was sooner?
Yes, they would do this to allow the client to claim more liquidated damages when there is a leitimate reason to bring it forward..
What happens if a contractor disagrees with a CA/EAs decision surrounding an EOT
Dispute
What are liquidated damages?
liquidated damages are pre-determined damages, calculated before damage has been incurred, that may not represent the true damage but does provide certainty of what the damages will be.
Where does the language behind liquidated damages come from?
Liquidare – to make clear or certain
A latin word
Whats the difference between liquidated and unliquidated damages?
Liquidated - pre-determined, clear from the start
Unliquidated - retrospective, left for the courts to decide (uncertain)
What are the two rules for LDs to be valid?
- They must represent a true and documented calculation
- They must be a genuine pre-estimate of loss and not be a penalty
This is set out in common law regarded LD’s
An obvious sign of a penalty would be a gross misestimation of ascertained damages
If there are no valid LDs in the contract - can the client recover other delay damages?
Yes - these would be unliquidated damages and would be acheived through dispute
What is the main benefit of LDs?
Clear vision of what damages will be - clarity for both parties
What is the main disadvantage of LDs?
Damages may not represent true damages, client could be under or over reinbursed.
Can you name the Relevant events?
There are 14 - lol good luck
- Changes from the employer
- Employer instructions
- The client not giving the site
- Archaeologist on site
- Suspension due to employer not paying
- Impediment causing delay by employer
- The fault of the state, unexpectedly needing to do or not do something
- Really bad weather
- If there is damage from specified peril, e.g., fire or flood, the insurance will cover the cost but there will still be time needed to remedy – this does that.
- Terrorism
- Industrial action
- New laws
- Delays from e.g., planners where contractor did everything possible to avoid.
- Force majeure – an event beyond the control of the parties. E.g., covid.
What are the benefits of EOTs?
- It relieves the contractor’s liability for liquidated damages for a delay that they did not cause
- It enables another completion date to be set, which maintains the employer’s ability to take liquidated damages if another delay occurs
