Delay in Contract Execution and Professional Negligence under JCT 2011: An Analysis - Assignment Example

Delay in Contract Execution and Professional Negligence under JCT An Analysis Question A Part Under JCT a contractor is required to give notice to the Contract Administer / Architect when there is a delay in the project. For each and every kind of delay, under clause t, a contractor is required to elaborate the cause of the delay in the notice to be so given. Further, a contractor should offer any additional information as needed by the Architect which is reasonably required for the purpose of this clause. If a contractor fails to give a notice on time, the contractor may not be granted extended preliminaries or extension of time. Further, he will be asked to pay liquidated damages for his failure to inform to the architect in time about the delay. In his notice , the contractor should give the details of the effect of the delay is , whether delay has been caused due to Relevant Event and an estimate of time extension for the completion due to delay (Chappell 2014 p.179). On receipt of notice from the contractor, the architect should then evaluate a) whether the completion of construction is being delayed and b) whether the cause of the delay is a Relevant Event. Further under the Intermediate Building Contract, if the architect does not deem that completion is delayed or the cause of delay is due to a Relevant Event, then, he is not liable to issue a notice expressing this (Contract consultant’s .com 2013). JCT contract contains a list of “Relevant Event” that warrants to the issue of a Notice of Delay for an extension of time under clause 2.20 of JCT Intermediate Building Contract 2011, and some of them are listed as under: Changes or Variations: any change in the work that is in variation to the original plan which delayed the construction period. Exceptional bad or adverse weather conditions Delay due to “Act of God” or “Force Majeure” which is not come under adverse weather conditions or under “Specified Perils” (Towey 2012). As ‘exceptional adverse or bad weather conditions’ fall under “Relevant Event,” Tortoise is eligible for an extension of time under JCT 2011. Tortoise has to give a notice of delay due to exceptional bad or adverse weather scenarios within 28 days or four weeks of the delay. Assuming that 28 days have not elapsed from the “Relevant Event,” Tortoise now can serve the notice on Quicksilver as the adverse weather conditions constitute a sufficient reason for delaying the progress of the works as it falls under “ Relevant Event “ under JCT 2011 and JCT contract has a provision for the extension of time under such scenarios(Chappell 2014 p.179). In London Borough of Merton1case, it was held that if there was a failure on the part of the contractor to give notice of delay, which may be of its own delay, it would be regarded as an infringement of contract and the architect is authorised to initiate such an infringement into account when awarding a future extension of time (Turner & Turner 2014 p.567). If “Relevant Event” is the main reason for the cause of delay, then, the architect would serve a notice in writing detailing out a “reasonable and fair extension of time. The architect should serve the notice of extension on the contractor by taking into account the duration of the delay happened, and extra time needed for the completion date (Chappell 2014 p.179). In Water Lilly & Company2 case, it was held that the contractor should get an extension of time for the whole period of the relevant delay (Tolson 2014 p.152). Under the JCT Design and Build Contract 2011, after the receipt of notice from Tortoise, Quicksilver has 42 days in which it has to inform the contractor of the extension of time or its request has been refused. The clause 2.28.6.1 states that the contractor shall continuously employ his best efforts to forbid delay in construction contracts. It is the duty of the contractor to forbid the delay, so far as he can reasonably. The JCT contract inflicts a duty upon a contractor to continually employ his best efforts to stop the delay triggered, being further delayed not within the relevant completion date under clause 2.18.6.1. However, in the case ‘Relevant Events’, the delay has to be excused by the owner (Chappell 2014 p.178). Part II Even though, the parties have not signed the JCT contract, there would be many circumstantial evidence there to prove that there existed a contract between Quicksilver and Tortoise. For instance, under JCT, day work sheets or vouchers should be submitted by Tortoise to the architect for verification within a week immediately following week in which the work was completed, and architect should sign the same thereby certifying the work done by the Tortoise. In Ampleforth Abbey Trust3case, there was no written contract between parties in a construction contract, and the major portion of contract was carried out on the letter of intent basis. The court held that project manager of the defendant failed to complete the written contract and hence, there was a breach of contract. This case law buttresses the significance of ensuring that construction contracts should be in writing instead of simply banking upon LOIs (Home & Mullen 2013). In JDM Accord Ltd4, it was held that despite the fact that the contractor submitted the sheets in time, but the same was not signed are to be regarded as “evidence of the work carried over, unless they can be claimed to be erroneous (Chappell 2006:118). JCT contract contain a list of “Relevant Event” that warrants to the issue of a Notice of Delay for an extension of time under clause 2.20 of JCT Intermediate Building Contract 2011, and they are listed as under: Changes or Variations: any change in the work that is in variation to the original plan which delayed the construction period (Chappell 2006 p.347). Variations in the contract may include changes in material specification, changes in design and cancellation of some work. A contractor has the right to refuse to carry out those variations on reasonable footings. The standard JCT contract always has a process to calculate the value of a variation in a schematic manner. The contract may permit for discretionary introduction of a fluctuation clause. Such fluctuation clause offers a mechanism for reimbursement of any increase in input prices over which they have no authority (Coleman 2009). Hence, Tortoise should rely on the fluctuation clause in the JCT contract and should ask for extension of time and reimbursement of additional cost to be incurred if the Quicksilver wants to impose changes in the design. Time at large under the common law principle in which the fixed contractual completion date which is explained by liquidated damages will be inflicted in almost in all bespoke and standard forms of contract, which would be rendered ineffective by the courts. This is based on “prevention principle” where the employer is barred from cancellation of the contract where failure to meet the deadline is due to action of an employer and where the construction contract does not have a mechanism for the extension of the contract completion date. Under common law, the contractor is relieved of his duty to finish the works by the quantified completion date. Thus, under common law, the contractor is bound to complete the contract within a “reasonable time” and the employer is prevented to levy any contractual liquidated damages for such delay. Now, the majority of standard construction contract forms include condition like adequate extension of time procedures (Chappell 2006 p.105). In Peak Construction (Liverpool) Ltd 5case, Salmon L J viewed that where a construction contract has not prescribed any extension of time facility, in such scenario, it was obviously prejudicial for the employer to rely upon original fixed completion date where a contract was delayed due to action of the employer or due to force majeure incidents. However, even though now JCT contract contain extension of time options, or where the owner refuses to extend the deadline for delay due to adverse weather conditions, time at large can be relied by the contractor for his claims (Turner & Turner 2014 p.568). In City Inn Ltd6 , it was held that the failure on the part of the contractor to notify in time any delay with the condition precedent did stop him from claiming an extension of time, but this would not make the liquidated damages commitment as an enforceable penalty or leave time at large. That the above case stresses that freedom of the contract should be esteemed. If the parties have consented to a stipulation precedent to the right of a contractor to claim an extension of time, then, tribunal or courts would give legal effect to it (Bellhouse & Partner 2007 p.8). Under common law, for breach of contract, an aggrieved party may be awarded any one or combination of the following reliefs; a) compensatory damages, b) punitive damages, c) liquidated damages, d) Quantum meruit- where a court can grant to affected party for what they deserve for any work that has been asked to do by the contractor or additional costs incurred by the contractor for the change in design at the later stage by the owner or the architect. In Martin7 case , where a party enters into a contract with another party and acknowledges the service but without mentioning what compensation shall be paid, the aggrieved party may claim the value of the serviced rendered under quantum meruit. Thus, Tortoise can claim from the Quicksilver the additional cost incurred by it for the implementation of design changes proposed by the Quicksilver (Blond & Gruning 2009 p.404). (Words Count 1650) Section B In any construction contract, an architect is employed by an owner, and he will be part of the professional team. In a standard form of contract like RICS, RIBA or JCT, the primary professional duties of professionals will be always detailed out. These standard forms of contract explain the ambit of services to be provided in terms of preparing drawings, plans, advising, supervising the works carried out and certifying the costs. An architect is to act an agent of the employer, and his employment term is implicit in common law from the relationship of agency. An architect has an obligation to exhibit adequate care, expertise and diligence in good faith. Further, an architect is having authority to bind the employer. Moreover, an architect is anticipated to function within his ambit of agency and should not surpass his delegated power or authority (Fletcher 2014 p.1). A professional like an architect will be held accountable to the employer if he fails to design the work as per standards , fails to supervise the ongoing work , to make sure that the building is constructed as per plan and to certify the works carried over by the contractor correctly. (Fletcher 2014 p.2). To initiate negligence action against an architect, the following four elements are needed. Duty: The aggrieved person must demonstrate that the architect is owing a legal duty to him, which denotes that the architect has some legal duty to do something or should discontinue from doing something. Infringement- The architect should have failed to carry out some duty or discontinued from doing something that should have been carried over. Cause – The infringement of duty by the architect is the proximate reason of harm to the claimant. Damage- The breach by architect should have ended in actual harm or damage to the claimant (Demkin 2008 p.39). It is to be noted that all the four elements should be existed for a successful claim of damages against an architect for his negligence in duty. An architect can be sued for his negligent action if he has committed errors (acts of omission) or the architect’s omission (failure on the part of an architect to carry out some action). Negligent actions against an architect include the following: Failure on the part of an architect to design as per applicable statutes, zoning regulations, ordinances or building norms. Failure on the part of an architect to find out an apparent fault in a contractor’s application for payment A weak building structure to withstand wind loads experienced at the site. Blindly following of an owner’s order knowing that it will end in a code infringement (Demkin 2008 p. 9). In London Borough of Merton8 , it was held that the accountability of an architect was an on-going one, and he will be held be held responsible if the materials supplied found to be defective later (Fletcher 2014 p4). In Greaves & Co9 case the defendant was entrusted with designing a warehouse, and they were instructed while designing, they have to pay attention to the weight of loaded forklift trucks. The first floor started to develop cracks after the construction which was mainly due to truck movement. It was held by Kilner Brown that the defendants were not in infringement of their duty to exhibit adequate skill and care, but should have shown a higher duty to make sure that the works were suitable for the purpose. However, the Court of Appeal turned down the decision of the lower court and observed that considering the background of the case, there existed an implicit condition that the design should be apt for the purpose of use by forklift trucks (Fletcher 2014 p.6). In Payne10 case, claimants who were subsequent buyers of a property sued that the defendant was accountable for structural issues and inappropriate design. However, the above claim under tort failed. Further, the claimant opposed that the defendant had vouched that the foundations as suitable and fit for the purpose. However, the court turned down the argument and opined that a professional like an architect who gives his opinion or judgment on a construction subject does not essentially offer a warranty , but merely assumes to demonstrate adequate professional care and skill (Fletcher 2014 p.8). In Harrison11 case, it was held that as per the section 1 of the Defective Premises Act 1972, a single duty is ushered on an architect that he should certify in a professional manner, whether proper materials have been used and whether the house is fit for the residential purpose when finished (Fletcher 2014 p.10). Further, the Construction (Design and Management) Regulations 2007 inflicts the following legal obligations on professionals associated in construction industry namely a) to make sure that any design evades predictable peril to safety and health of any individual involved in construction work or probable to be impacted by it, b) to make sure that the design is made in accordance with the Workplace (Health, Safety and Welfare) Regulations 1992 and to offer design information (Fletcher 2014 p.10). It is to be noted that the infringement of any above regulations does not result in a civil claim, but it is probable to be pertinent to any claim of infringement of duties under common law. In case of professional negligence by an architect, an aggrieved party can proceed against him both under contract law and under tort as held in Henderson12 case (Fletcher 2014 p.12). In “Hedley Byrne Co. Ltd13 case, it was held by the House of Lords that an architect or a professional is owing a duty of care in negligence to both to third parties and to his client. When tendering an expert advice knowing that it will be shared with third parties who will bank upon it and in such scenarios, the professional who tendered such advice or information will be accountable for any pure economic loss which the third parties may witness (Lawson & Smith 1997 p.231). In Clay14 case , it was held that professionals relating to the construction field and architects own a duty of care not to cause personal injury to any party who are likely to be injured (Fletcher 2014 p.18). In Bellefield Computer Services Ltd 15 case it was held that the duty of care on the part of a professional or architect is to not to cause any physical damages both to the other property other than that in regard to the one where engaged by an architect and also to the property of the clients (Fletcher 2014 p.19). In Baxall Securities Ltd16 case, where a claimant who was a lessee of a warehouse who alleged that the defendant who was an architect had failed to design the roof drainage system with the adequate care, and hence he suffered a loss due to faulty design of the roof drainage system. It was held by the Court of Appeal that an architect owes a duty of care to avoid physical damage (Fletcher 2014 p.19). In Bellefield Services case17 , the Court of Appeal applied the same principle laid down in Baxall case and held that whether a specific defect falls within the ambit of duty of care of an architect which rests upon the original design and overseeing duties of an architect. Further, a duty of care will be applicable in the case of a later occupier as regards to the latent defects of there was a failure on the part of an architect of reasonable chance of inspection (Fletcher 2014 p.20). Machin 18 case – In this case , an architect was requested to a write a letter for the advantage of his client who was disposing off his property , detailing out the condition of the refurbishment and repair works. The respondent was conscious that such letter would be exposed to third parties. It was held by the Court of Appeal that no duty of care happened in regard to the letter. Thus, in this case, the magnitude of the Healey Byrne duty will be restricted by the magnitude of foreseeable footing upon the information and advice (Fletcher 2014 p.21). Lidl Properties 19case- in this case the claimant contended that it had bought a site banking upon the advice tendered by the defendant engineers . The advice by the defendant was tendered superfluously at a meeting. It was held by the court that there existed a duty of care in this case as it was foreseeable that the claimants would be banking upon the facts for the purposes of tendering an offer for the purchase of a site (Fletcher 2014 p.22). Ove Arup20 case– In this case , the defendant engineers were said to have made designs for a power station which was later proved to be defective. Chain of companies were incorporated and associated to the employer as this being deliberate devising of a complicated contractual chain thereby establishing that there was not direct relationship between the engineers and the employer. The chain was mainly established for tax objectives. It was held by the court that the chain was unreliable with the assumption of accountability by the engineers to the Claimant for the proper execution of his services. It is to be noted that a chain of companies will not necessarily exempt a duty of care, but will facilitate it if it denotes that the parties ‘aims were incompatibility with the assumption of risk. (Fletcher 2014 p.23). Thus, the verdict in cases like Baxall Securities Ltd and Bellefield Computer Services Ltd did not impact the capability of an occupier of a building in the future where the professional negligence resulted in personal damage or injury to other properties. Nonetheless, in cases of economic losses, one can claim damages under the tort provisions against a professional unless the claim could be initiated within the notion of negligent misstatement as held in Hedley Byrne 21 case. Lord Oliver in Murphy case observed that economic loss would not be retrieved in negligence cases where loss was not able to attributable closely or where it would be not possible to minimise liability in other cases well within acknowledgeable bounds (O’ Farrell 2013). Caparo Industrial Plc22 case –In this case, Lord Bridge framed a three-fold test to fix professional negligence namely proximity , foreseeability of damage and fair ,reasonable, and just causes to inflict a duty of care. The three fold verdicts also followed in spring v Guardian Assurance Plc and in Smith v Bush where a duty of care to be shown by surveyors to their prospective mortgagors (O’ Farrell 2013). Henderson case elucidated that professionals owe their contractual clients a synchronised duty of care in tort as regards to the offer of their services. Nonetheless, any tortious obligation may not be coextensive with the contractual obligation. In extraordinary cases, the professional’s duty in tort will be applicable to above their contractual duty, but it is more common for the contractual setups to minimise or exclude any duty of care as demonstrated by Lord Golf in Henderson. (O’ Farrell 2013). In HOK case23, it was held that an owner was entitled to recover damages for the Architect’s predecessor’s infringement of his duty to forewarn about the design faults. The court opined that the architect offered ‘information’ instead of ‘advice,’ to the owner but viewed that the owner could recoup damages to mirror the losses ascribable to the Architect’s failure to forewarn (O’ Farrell 2013). Hence Lord Reid’s view that under the law of agency, an architect has accountabilities to the employer but at the same juncture, it is obligatory to arrive at decisions on certification “justly, holding the balance between his client and the contractor” in Sutcliffe24 seems to be rational. (Words Count 2023). . List of References Blond, N C & Gruning, D W., 2009.Contracts. London: Aspen Publishers Online. Chappell, D. , 2006. Construction Contracts. London: John Wiley & Sons. Chappell, D., 2014., JCT Standard Building Contract 2011. London: John Wiley &Sons Coleman, L., 2009. 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