Q&A: Prolongation, JCT, NEC, and Force Majeure

In our third Construction Clinic session, which took place in April 2020, Paul Gibbons answered questions related to prolongation and NEC and JCT contractual issues arising from COVID-19. The following questions have been excerpted from that session. The entire webinar may be viewed on-demand on YouTube. Question 1 Question: What is the remedy under the NEC3 Engineering Construction contract where there is a defect notified by the Employer, but this is a latent defect and notified after the defects date. Is the Contractor obliged to correct this? Answer: The NEC3 sets out the obligations of the Project Manager and the Contractor. The obligations related to notifications of defects are set out in clause 42. The Contractor’s obligations in terms of dealing with and resolving the defect is set out in clause 43. With latent defects after the defects date, it is the Contractor’s responsibility until the end of the limitation period under English law, which is either 6 or 12 years depending…

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Q&A: Delays, Notice, and Force Majeure

The following questions, related to contractual issues arising from COVID-19, were posed during our second Construction Clinic, held in April 2020. The entire webinar may be viewed on-demand on YouTube. Question 1 Question: Where is the coronavirus categorized under FIDIC Red Book with regard to the payment of costs? Answer: When it comes to payment of costs associated with the EoT, or any other costs associated with the coronavirus, the most appropriate place is Sub-Clause 19 (Force Majeure), but there are some qualifications and FIDIC aren’t really clear about epidemics here. Sub-Clause 19 (Definition of Force Majeure) states, “Force Majeure may include, but is not limited … of the kind listed” and the kinds that FIDIC refer to in the list are all man-made things such as hostilities, war, taking over of power, etc. etc. So, it doesn’t tick that box. Where it says it’s not limited to those things, does that mean there are other man-made things, or does that mean it could be anything…

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Q&A: Delays, Extension of Time, and Force Majeure

The following questions, related to contractual issues arising from COVID-19, were posed at the end of our first Construction Clinic held in April 2020. The entire webinar may be viewed on-demand on YouTube. In the webinar, these questions are preceded by a brief presentation on the general Notice requirements that exist regardless of the form of contract. Question 1 Question: Does the Contractor have any duty or obligation to mitigate delays and costs and, if so, to what extent? (related to FIDIC Red Book 1999). Answer: FIDIC doesn’t give any explicit obligations to the Contractor to mitigate. However, in most jurisdictions, it’s an implicit requirement that both parties work together proactively for the benefit of each other. So there is an implicit obligation to do what you can to mitigate the circumstances. The SCL protocol goes further than this and actually says that mitigation should take place but not to the extent that the Contractor should incur additional costs or mobilise…

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How to Manage and Minimise the Submission of Spurious Claims

One of our blog readers asked for some suggestions as to how to effectively manage and minimise the submission of spurious contractor’s claims, which I thought would make an interesting subject for other readers, as well. Consultants need to spend a lot of time and effort to manage and respond to contractor’s claims, so to avoid wasted effort, it is worth making sure that this time and effort is devoted to justifiable claims and is not wasted on reviewing and responding to claims for which the contractor has no entitlement, or to those that have not been submitted in an appropriate manner to enable a proper review and response to be made. It must be remembered that the onus is on the claimant to prove the case and even though most contracts require the consultant to be fair and reasonable when responding to claims, this obligation does not extend to proving the contractor’s claim on the contractor’s behalf. Most forms of construction contract support this obligation and require the…

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How to Ensure You Avoid Costly and Time-Consuming Disputes on your Projects

In this post, I'll look at ARCADIS' annual Global Construction Disputes Report 2019, as it makes interesting, but, not altogether surprising reading. For the time period covered in the report, the top three reasons for disputes are: 1. ‘Owner/Contractor/Subcontractor failing to understand and/or comply with its contractual obligations; 2. Errors and/or omissions in the contract document; 3. Failure to properly administer the contract.’ Some other interesting noteworthy observations are: 1. ‘Human factors and misunderstanding of contractual obligations continue to be a primary cause of disputes’; 2. ‘With more project participants, it is essential for those involved to understand the contract, their role in the project and how to work with the team’; 3. ARCADIS suggest that ‘at least three building blocks are needed for successful dispute avoidance and resolution: (1) contractual mechanisms whereby risks are identified early and parties are obliged to consider how to address them; (2)…

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