The Bill of Quantities - Essay Example

?The effect of the above amendment included in the Bill of Quantities. The first issue is what effect the Amendment has on the contract that was formed between the parties. The Amendment stated that “All Variations (exceeding ?25,000 in value), extensions of time and loss and expense determinations are subject to the approval of the officers of the Celtic Tiger Bank (CTB). No payment and / or additional time will be made and / or awarded respectively without the above approval. For the avoidance of doubt clauses 2.28, 4.23 and 5 of JCT 2005 are deemed to be amended accordingly.” In the Housing Grants, Construction and Regeneration Act 1996, there is a provision that states that “A provision making payment under a construction contract conditional on the payer receiving payment from a third person is ineffective, unless that third person, or any other person payment by whom is under the contract (directly or indirectly) a condition of payment by that third person, is insolvent.” (Housing Grants, Construction and Regeneration Act 1996 SI 1996/53, London: HMSO §113(1) hereinafter “HFCRA”). The question is whether this provision applies here. If it does, then the provision would be regarded as ineffective, therefore void. The analysis of this would begin by analyzing the parties. The parties to the construction contract are Strummer Construction Ltd. and Clampdown Developments, Inc. Celtic Tiger Bank is financing the project, but is not a party to the contract, therefore would be considered to be a third person. Yet, Celtic Tiger Bank is essentially running the show, as their officers would be the individuals who must approve extensions, variations more than ?25,000, loss and expense determinations. If their officers do not approve this, then the party requesting any of the above would not get paid, and the extension of time would not be approved. Therefore, this clause may be invoked, as the CTB is the contract administrator, and is not a third party, and they dictate as to whether or not money will change hands. Moreover, they are not insolvent, so this clause may hold water. CTB is a third person, yet they are creating the conditions by which both parties must abide. But is this amendment “A provision making payment under a construction contract conditional on the payer receiving payment from a third person?” Clampdown Developments is the party who is in charge of making payments to Strummer. If Strummer does not comply, then the payments would not be made from CTB to Clampdown Developments, and this, in turn, would cause Clampdown Developments to not make payments to Strummer. The architect was the one who was issuing the offending variations, and, as a result, CTB has refused to pay monies to Clampdown, and, in turn, Clampdown has not paid Strummer. So, it seems that the payment from Clampdown to Strummer is, in fact, conditional upon Clampdown receiving payment from CTB, who is a third person, and that these payments are conditional upon CTB approving them. Therefore, there is the possibility, if a court can interpret this clause in such a way, that the clause would be ineffective. Another issue is whether or not there was even a contract formed anymore, because this Bill of Quantities in effect substantially changed the contract that the parties had already formed. This would be considered to be a counteroffer, which effectively cancels the original offer (Hyde v. Wrench [1840] EWHC Ch J90). However, this situation is similar to that in the landmark case Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp. Ltd. [1977] EWCA Civ. 9. This is the case that established that, in a battle of forms, the form that was accepted last would the one that controls. Certainly the parties accepted the additional terms, as they performed without objection to the terms. Therefore, Butler controls, and the last form, which is the one that contained the amendment, is the one that formed the contract. So, the amendment would be a part of the contract, if there were not the issue of the privity of contract and a violation of the Housing Grants, Construction and Regeneration Act 1996. However, the parties agreed that nothing in the bill of particulars can override the agreement. This is in Clause 1.3, which states that “the agreement and these conditions are to be read as a whole, but nothing contained in the Contract Bills or the CDP Documents, nor in any Framework Agreement, shall override or modify the Agreement or these Conditions” (JCT). Therefore, the parties agreed that this bill of particular will not override their agreement, and their agreement was bargained for. Therefore, because this is what the parties agreed, the Bill of Quantities will not override the agreement that the parties made, and this Amendment should have no effect. Because of this, it can be argued that none of the variations should have to be submitted to the Celtic Bank for the Celtic Bank’s approval, and that the payments and additional time necessary also do not have to meet Celtic Bank’s approval and the amendments that were to be made by the Bill of Quantities will not have to be amended. The parties apparently did not bargain for the provisions that were contained in the Bill of Quantities; they did, however, bargain for the provision that stated that nothing in the bill would override the agreement. The omission of the monies relating to the Variations which have been omitted from the February 2011 interim payment. The next question is whether the omission of the monies relating to the variations was legally proper. There are many ways to approach this question. The first is, whether there was a waiver of the condition when CTB went ahead and paid the monies when the architect repeatedly submitted variations, and these variations were paid without consequence. The conditions that were put upon payment would be considered to be conditions precedent - if these conditions are not met, then no payment will be made. In other words, performance on the contract will not be made unless the conditions are met. Yet, the payments were made, so this might be an implied waiver of these conditions. For authority on this, the cases of Nasser Diab v. Regent Insurance [2006] UKPC 29 and MJ Harrington v. Axa Oyak [2006] EWHC 112 established that insurers essentially waive conditions precedent when, with full knowledge that the insuree has breached the conditions precedent, the insurance company goes ahead and performs on the contract. The insurers actions in these cases showed amounted to a clear representation that they would not rely on their rights, therefore they waived the condition precedent. These cases provide authority for the possibility that Clampdown waived the condition precedent that Variations in excess of ?25,000 must be approved by CTB, when they paid the monies previously, despite these variations apparently not being approved by CTB. Therefore, if this is the case, then Clampdown must continue to pay monies even if the condition precedent was not met, as they have clearly demonstrated an intent to not rely upon their rights. Another way to approach this question is by referring to the Housing Grants, Construction and Regeneration Act 1996. Particularly, Section 111 states that Housing Grants, Construction and Regeneration Act 1996 “(1) A party to a construction contract may not withhold payment after the final date for payment of a sum due under the contract unless he has given an effective notice of intention to withhold payment. The notice mentioned in section 110(2) may suffice as a notice of intention to withhold payment if it complies with the requirements of this section. (2)To be effective such a notice must specify— (a)the amount proposed to be withheld and the ground for withholding payment, or (b)if there is more than one ground, each ground and the amount attributable to it, and must be given not later than the prescribed period before the final date of payment” (HGCRA §111). Therefore, according to this section of the HGCRA, Clampdown would be required to give notice that they are withholding payment, and this notice must specify why the payments are being withheld, how much payments are being withheld, and this notice must not be given later than the prescribed period before the final date of payment. The parties are the ones who can negotiate this prescribed period, and this is not indicated in the facts. Nevertheless, it is clear that this notice was not given by Clampdown to the architect nor Strummer in a timely period. Clampdown may argue that it is clear from the contract that these monies would not be paid if there was a violation of the condition precedent of getting approval from CTB. It does seem clear from the wording of the contract that the parties could anticipate that monies would be withheld upon the violation of this condition. Nevertheless, it does not excuse Clampdown as far as statutory notice. There is no indication that this statutory notice was waived by the parties, therefore, Clampdown is still required to give the requisite notice as provided by the HGCRA. This is compounded by the waiver problem. Therefore, it seems that Clampdown would still be required to go ahead and make the payments, unless they have given proper notice to the parties involved. Whether, in principle, Strummer Construction Ltd is entitled to an extension of time and to payment for loss and expense. Under the Joint Contracts Tribunal 2005, Strummer is entitled to an extension of time. This is because under § 2-28, an extension of time shall be given if there is in existence a relevant event that is preventing the contractor from completing the project on time (Joint Contracts Tribunal 2005 § 2-28). Moreover, relevant events, according to §2-29 is exceptionally adverse weather conditions, and “civil commotion” (Joint Contracts Tribunal 2005 §2-29). The facts indicate that adverse weather is one of the reasons for the delay, so it is unclear whether this would be considered “exceptionally adverse weather conditions.” However, the student protest would probably be considered to be civil commotion, so Strummer would be entitled to at least a one week extension due to the students’ demonstration. Moreover, according to §2-29 of the Joint Contracts Tribunal 2005, another relevant event is an impediment, prevention or default on the part of the employer (Joint Contracts Tribunal 2005 §2-29). The facts indicate that one of the issues Strummer is having is the issuance of major variations, so this might be considered to be an impediment, prevent or default on the part of the employer, so this would be another reason why Strummer would be entitled to an extension of time. Whether the Architect is required to act impartially The next question is whether the architect is required to act impartially. The traditional way that courts have approached this question is that architects are independent. In fact, an early case stated that the architect’s independence makes him a quasi-arbitrator, which made him immune from negligence claims (Chambers v. Goldthorpe [1901] 1 Q.B. 624). However, this case was overturned in 1974 by Sutcliffe v. Thackrah [1974] AC 727. Nevertheless, the architect was still considered to be independent and was expected to act impartially – “The employer and the contractor make their contract on the understanding that in all matters where the architect has to apply his professional skill he will act in a fair and unbiased manner in applying the terms of the contract” (Sutcliffe v. Thackrah at 729). Moreover, the architect has “two different types of function to perform. In many matters he is bound to act on his client’s instructions, whether he agrees with them or not; but in many other matters requiring professional skill he must form and act on his own opinion” (Sutcliffe v. Thackrah at 730). Therefore, the Sutcliffe court stated that an architect must act fair and unbiased in applying the terms of the contract, while also being bound by the client’s instructions. This seems somewhat contradictory, because it would seem that this would make the architect more beholden to the employer than to the contractor, but the verbiage that the architect must act fairly and impartially in applying the terms of the contract would seem to supercede this. That said, recent decisions have moved more towards the view that the architect is not quite independent, but, rather, beholden to the employer. For instance, Beaufort Developments v. Gilbert Ash (1998) 88 BLR 1, the court found that an architect is an agent of the employer, therefore not independent (Beaufort Developments at 3). Therefore, the judicial trend has been towards making the architect more of agent of the employer, so this means that the architect is not required to act impartially, but, rather, must act in the best interest of the employer. Although this was not always the case, it seems to be the case now. Whether Strummer Construction Ltd is entitled to suspend the Works. The next question is whether Strummer Construction would be able to suspend the works. The argument that Strummer Construction can make is frustration, which means that, due to unforeseen circumstances, the contractual obligations become impossible to perform. This doctrine was established in 1863 through the case of Taylor v. Caldwell (1863) 3 B&S 826. However, Davis Contractors v. Farham UDC [1956] UKHL 3 would state that the conditions faced by Strummer would probably not amount to making performance of the contract impossible, as they found that there is a difference between a job becoming more onerous because of an unforeseen circumstance, and this unforeseen circumstance causing the job to become that of a different kind contemplated in the contract. In the former case, the contract non-performance is not excused; in the latter case, it would be. In this case, there are certain things that have occurred that would have made Strummer’s job harder. Nevertheless, these make the job more onerous, yet does not change the character or kind of job that Strummer is to perform. Therefore, Strummer does not have the doctrine of impossibility or frustration to fall back upon. As for statutory provisions, according to the Housing Grants Construction and Regeneration Act 1996 § 112 states that “Where a sum due under a construction contract is not paid in full by the final date for payment and no effective notice to withhold payment has been given, the person to whom the sum is due has the right (without prejudice to any other right or remedy) to suspend performance of his obligations under the contract to the party by whom payment ought to have been made (“the party in default”)” (Housing Grants Construction and Regeneration Act 1996 § 112). Therefore, if Strummer can make the case that they are due money, and this money is not paid in full by the final date of payment and no notice was given, as provided for above, then Strummer may suspend the works under this provision of the HGCRA 1996. Authorities Cited Housing Grants, Construction and Regeneration Act 1996 SI 1996/53, London: HMSO. Joint Contracts Tribunal, 2005. [online] Available at: http://www.jctltd.co.uk/stylesheet.asp?file=29072005094705 [Accessed 17 February 2011]. Beaufort Developments v. Gilbert Ash (1998) 88 BLR 1. Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corp. Ltd. [1977] EWCA Civ. 9. Chambers v. Goldthorpe [1901] 1 Q.B. 624. Davis Contractors v. Farham UDC [1956] UKHL 3. Dunlop Tyre Co v Selfridge [1915] AC 847. Hyde v. Wrench [1840] EWHC Ch J90. MJ Harrington v. Axa Oyak [2006] EWHC 112. Nasser Diab v. Regent Insurance [2006] UKPC 29. Price v. Easton (1833) 4B & Ad 433. Shanklin Pier v Detel Products [1951] 2 KB 854. Sutcliffe v. Thackrah [1974] AC 727. Taylor v. Caldwell (1863) 3 B&S 826. Tweddle v. Atkinson [1861] EWHC QB J57. Read More

 

Read More