Contractual Remedies and Solutions in Case of Delay - Assignment Example

Professional Style Reports Relating Contractual Remedies and Practical Solutions that May be Available to a Project Team in Case of a Delay Student’s Name Institution Affiliation Table of Contents Table of Contents 2 1.Introduction 3 2.Executive Summary 3 3.Scope and Objectives 4 4.Principles of JTC Contracts 4 5. Independent Assessment of the Merits and Demerits of the Case 5 6.Implications of Avoiding Adjudication Process 9 7.Letter for Adjudication 10 1. Introduction Construction is a dynamic activity, and delays and extensions are likely to occur at any stage. Situations of delays and requests for extensions are very typical. For this reason, JTC (2015) guidelines make provisions for such cases. The recent revision of the articles and guidelines has seen reasons such as shortage of materials and lack of workforce removed as a relevant event that could necessitate an extension. Regardless, situations such as force majeure and adverse weather conditions have been retained as possible reasons for an extension. 2. Executive Summary The contractor, who is our client presents to us a case of general delays and bad weather as the causes of delay. Considering that bad weather is a valid reason, it is not easy to determine whether general delays can be considered a strong reason to absolve the firm from paying liquidated damages. Preliminary reports from both the contract administrator and our client reveal that there is need to conduct an investigation to determine the cause of the general delays. The findings of the report will establish the extent of liquidated damages payable as well as losses and expense claims. In the meantime, this report highlights various contractual and legal issues presented by the case and attempts to advice on the most suitable legal action. It examines the principles of JTC (2015) contracts and reviews the financial, legal and contractual obligations with respect to the contracts. In addition, it explores the merits and demerits of the case and attempts to assess the possibility of successful liquidation claims against the employer by our client.. 3. Scope and Objectives As a contractor’s legal representative, we examine the contractual issues presented by the case. In addition, we explore possible remedies and their probable justification. The objective of the review is to ascertain the extent to which our client is liable for liquidated damages and whether there are any provisions in the law that would mitigate such claims. Also, we will look whether our client is justified to make loss and expenses claims against the employer. From the information, our client argues that the extension provided by the contractor was too short. As their legal representative, we will look at the documentation by out client seeking an extension. As the legal advisor, we will be seeking a copy of the notice for extension, a copy of the letter of the employer’s reply and other relevant documents. We will independently assess whether the documents were sent within the required timelines in order to establish if our client complied with the regulations. In addition, we will examine suitable financial documents to establish whether the extent of financial liability being sought by the employer is valid. Finally, we will advise on the correct course of action should internal talks between our client and the contract administrator fail to yield the desired results. 4. Principles of JTC Contracts JTC contract terms are not fixed. The agreement also makes room for alterations and changes. This is one of the aspects that is important to our case. JTC (2015) contracts recognize that sometimes certain events may occur which may require either one or both parties to alter the performance of the contract. Consequently, it acknowledges that such eventualities are likely to affect the cost, time and quality of the projects. Under JTC guidelines, each party is expected to take responsibility for the cost and quality implications brought about by the alterations or changes. At no point should any individual be forced to suffer losses that it’s not its responsibility. As the contractor you need to know that the contracts also recognizes the need to have a person to monitor and control the implementation of the project, This power is given to the contract administrator who deals with the quality issues of the project. In addition, the contract also defines the amount of money payable, the procedure, and timelines. It addresses potential risks associated with the project and allocates responsibility to each party. This is another critical section to our client with respect to determining the extent of the firm’s liability. Finally, the contract advises on the way forward that in case of a dispute. In addition, since this is dispute has financial implications, it is important to note that the financial terms expressly stated within a signed contracts are final and legally binding. Therefore, it is important that our client is informed of the financial responsibilities they agreed to undertake. According to JTC contracts, the liable party bears the full cost burden. Therefore, an investigation report absolving you from any negligence or wrongdoing can be used to back claims of unmerited financial claims by the employer. 5. Independent Assessment of the Merits and Demerits of the Case Based on the information availed to us, our client (hereafter referred to the contractor) has several contractual and legal issues that need to be addressed. JTC (2015) contracts recognize that indeed delays do occur for various reasons. JTC (2015) highlights some of the circumstances and reasons that would necessitate an extension of a contract period. Previously, these reasons were covered under a subtitle known as extension of time, however, following some changes the heading has been revised to read adjustment of the completion date. The change in heading reflects the changes that incidences or occurrences that are considered as relevant events with respect to time extensions. From the information, our client cites bad weather and the general delays as the main reasons for requesting for an extension. JTC (2015) guidance notes lists severe weather conditions a relevant event that provides ground for a contractor to be given an extension upon request. However, in order to take advantage of the provision our client, who is the contractor, ought to have provided sufficient information to the contract administrator. The information should demonstrate that the impact of the weather condition on the works was appalling otherwise our client will be liable for liquidated damages or even a penalty. According to JTC (2015) guidance notes if the contractor does not provide all the requested information to enable the construction administrator to make a decision then they will lose their right to make loss and expense claims. Therefore, as we examine the relevant documents we will be seeking to establish whether the client gave notice requesting for an extension. We will also be examining the reasons provided and analyzing them to determine whether the provided extension was sufficient to ensure completion. The fact that the firm was able to receive an extension does not automatically mean that the contractor qualifies for a loss and expenses claim. It is important to note that although JTC (2015) recognizes adverse weather conditions as a relevant event, it is aware that each listed event can further be categorized as either excusable or non-excusable. Assuming that both the contractor did everything reasonable to mitigate the effects of the adverse weather on the construction then employer is expected to pay loss and expense claims to the contractor as agreed in the contract. However, if the delay was a result of normal adverse weather conditions, then the contractor will be liable for all the risks as well as costs. The firm should expect to pay the employer liquidated damages. All communication between the employer and the contractor or his agents should be in writing (Dunn, 2011). JTC (2015) regulations state that requests for the extension should be made in writing as soon as it becomes evident that the project is unlikely to be completed writing the agreed contractual time. The regulations state that this notice should be given from twelve weeks to the expected date of completion to allow the employer or his agent enough to make a decision. In the light of the information given, it is obvious that the contractor met this obligation. It is also evident that contractor furnished the contract administrator with all the required documents hence meeting his obligation to endeavor as stipulated by JTC (2015). For this reason, the insistence to deduct liquidated damages can be considered as the employer exercising their right to absolve themselves from additional financial losses due to our client’s lack of sufficient justification as to why the time extension was not enough to cater for the delays. The recent revisions acknowledge that the contractor’s obligation to endeavor does not imply that he is supposed to spend more money on the construction project. An insistence by the contract administrator that the contractor pays for liquidated damages is unfair. Such remarks amount to saying that the contractor is liable to putting more resources into the construction project. If it is assumed that both parties took all reasonable steps to prevent the extension, then it is unfair to force the contractor to bear the costs alone. The issue of liquidated damages is very crucial to our client. It is important to ascertain whether the amount of money due to being deducted is a liquidated damage. In order to determine the real situation, it is vital that one reviews the terms of the contracts at its inception rather than the time of the dispute. Based on the information provided, time allocated was insufficient hence the work was completed twelve weeks late. Lord Dunedin did rule that if the amount payable is higher than the perceived loss then such an amount can be considered a penalty and not a liquidated damage. The amount of three hundred thousand in liquidated damages is greater than the perceived loss; thus, the financial claims made by the client cannot be regarded as liquidated damages based on the preliminary information provided. For future projects, the contractor is advised to ensure that the firm is expressly clear on the relevant causes of delay. The term description general delays and bad weather are insufficient. In fact, the first impression is that it is the contractor’s fault. Despite the fact that further investigations may prove otherwise, it is recommended that the contractor maintains specificity from the start. This dispute between the contractor and the employer can be resolved through adjudication. In this circumstance, adjudication is the fastest and most affordable option for litigation. Each of the parties will bear their litigation cost; however, the party that loses will have to pay the adjudicator’s fees. In addition, the verdict of the adjudicator can be enforced by a court of law. In preparation of the adjudication process, as your client you need to provide us with all supporting documents, copies of written notices and other relevant documents that prove his claims. When it is clear that the dispute cannot be settled internally between you and the contract administrator as your legal representative we will look at other approaches such as mediation, arbitration and litigation. As the legal team scrutinizes the terms of the contract, we advise that an investigation is conducted to determine the cause of the general delays. The findings of the report together with a assessment of the contractual terms will guide out team as they decide to what extend is our client liable for financial burden and whether the employer’s loss and expenses claims are justifiable. 6. Implications of Avoiding Adjudication Process The issue at hand is a case of an unresolved dispute since both parties performed their obligations as directed by JTC regulations. The dispute at hand is in relation to extension of time and the CA’s position that do not acknowledge that there is an issue in regard to the subject matter since they had furnished our client with the necessary information. To resolve the matter, our client can take other measures in accordance with the provisions of JTC 2011. The issue can be resolved through mediation as provided in clauses 9.1, arbitration as provided in clauses 9.3 to 9.8 or lastly through litigation. Of the three options, mediation is the most cost effective and likely to resolve the issue within the shortest time. Litigation is not only expensive but also time consuming and could long terms disadvantages such as lost goodwill, potential future contracts. Resolving the matter through mediation allows the contract administrator and our client an opportunity to reconcile their differences. This process is moderated by an impartial third party. The role of the third party will be to intervene and offer assistance to both our client and the contractor administrator to enable them agree on the issues arising due to general delays and subsequent extension of time. The process is flexible, confidential and is likely to lead to a speedy resolution. This approach is highly encouraged because it allows communication between our client and the contract administrator. However, this process may not be effective if the contract administrator shows signs of unwillingness to participate in the process. If the issue cannot be resolved amicably through a mediation process, then the client can consider resolving the matter through arbitration. This process will involve the formation of a tribunal. A tribunal will be crucial in assessing evidential matters pertaining to the case, They also have the power to decide the extent to which they can apply strict rules of evidence, as well as take initiative to ascertain the facts and the position of the law. This process is private and is likely to lead to speedy resolution of facts. Lastly, if all other approaches fail then our client has no other option but to seek a legal solution. As mentioned earlier, litigation should be the last option if all other efforts fail. 7. Letter for Adjudication Beckham and Lily Advocates Unit 1023 P.O Box 8754 London BH17 3EL Mr. Paul Walters P.O Box 5689 London BH15 4 EL Dear Sir, RE: INTENTION TO SEEK ADJUDICATION On behalf of our client QS Survey, a contractor at out-of-town Hypermarket, and “in accordance with the provisions of the Housing Grants, Construction and Regeneration Act 1996,” we hereby formally notify you of \our client’s intention to settle the contractual dispute through adjudication. Our client wishes to resolve the dispute through adjudication as provided under section 2 (a) and (b) of the HGCR 1996 Act. The timetable for securing the appointment will be provided in seven days as specified by the Act. This non-litigation process will seek to determine the legitimacy of your intention to deduct a sum of three hundred thousand pounds as the liquidated damages from our client. In addition, our client will be seeking his right to loss and expenses claims as provided in the JTC (2015) contracts and other legal frameworks such as the SCC 98. We look forward to your cooperation. Yours faithfully, James Moore Senior Lawyer Beckham and Lily Advocates References Dunn, M. H. (2011). Brief notes on the JCT standard building contract 2005 (1). Rex Procter & Partners. Joint Contract Tribunal. (2015, February). Guides. Retrieved February from http://www.jctltd.co.uk/category/guides Read More