Suspension and Termination of Contracts Flashcards
What does Suspension mean?
When the Work’s are suspended
What does Termination mean?
Stopping the contract mid-way by one of the parties
Can the Contractor stop the Works?
At common law a contractor has no right to suspend the works, unless the breach is serious enough
to terminate the contract altogether;
Can the contractor claim for LaE’s
If it is the client’s fault, yes
Can the Contractor terminate the contract because of the suspension of Works?
Yes.
In most standard forms of contract a maximum period for suspension must be stated in the contract.
If suspended beyond the allowable period, contractor has the right to terminate his employment
What are the 3 forms of breaches?
- ‘Fundamental breach’,
- ‘Repudiatory breach’,
- ‘Breach that goes to the heart of the contract
What if a Contract is terminated under common law? What can the other party do?
Contract termination clauses CANNOT hinder a party
from terminating under Common Law
Clause 8.3.1
Parties can choose to terminate under common law,
even if contract terms provide for termination under the circumstance
What if you breach a warranty?
Give an example of a breach of warranty
Breaching a Warranty does not permit contract
termination; The innocent party can only claim for
damage
- Employer not granting possession of the site;
- Contractor subletting a major part of the Works without Employer’s approval
Who decides whether a term in the Contract is a condition or a warranty?
The Courts
Give examples of an Employers breach
- Failure to give possession of the site
- Non-payment of the sums due
- Withholding of certificates
- Hindrance of the contractor
Give examples of a Contractors breaches
- Continued delay
- Very serious defects signifying substantial underperformance
- Total abandonment or suspension of the work
What is the process for termination in JCT?
- Contract Commits default
- A/CA sends a written notice. It must be handed within 2 working days.
- Employers right to terminate begins (14 days) after Contractors receival of notice
- Right to termination expires (21 days)
- Contractor has right to terminate at any reasonable time.
The project in question was let on the JCT SBC/Q and incorporated the standard amendments imposed by Birmingham City Council. The works involved the refurbishment of a number of properties being managed by a housing association. The contractor appointed to carry out the works (Moss) failed to maintain progress in accordance with his agreed programme.
The first four blocks to be refurbished should have been completed within 9 and 10 weeks. In fact, each block took the contractor nearly 9 months to complete. These delays caused considerable problems for
the tenants, who had been decanted on the basis that they would soon be returned to their refurbished properties. The council also incurred considerable additional expense through the weekly compensation they were paying the tenants for having to live unsatisfactory temporary accommodation.
During discussions between the architect and the council, it appears that the architect was of the opinion that the poor progress on site by the contractor did not constitute a breach of contract, i.e. a failure to proceed regularly and diligently with the works.
You are to evaluate the decision made by the architect
COME UP WITH ANSWER
Describe the Termination by FRUSTRATION Procedure
2 Notices Required
Notice 1 – after expiring of the suspension period
(stated in the contract particulars) either can give a
written notice indicating intention to terminate the
contract.
Notice 2 – 7 days after notice 1, either party can give
notice 2, to terminate contractor’s employment under
the contract
Give Reasons for Termination by Frustration
- Force majeure (act of God)
- Instruction from architect dealing with discrepancies
caused by statutory body - Loss or damage caused by specified peril e.g. Fire (not
as a result of contractors negligence) - Civil commotion e.g. Terrorism
- Exercise of statutory power by government
