Time at Large and Reasonable Time for Completion
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TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
UNIVERSITI TEKNOLOGI MALAYSIA
TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
A project report submitted in partial fulfillment of the requirement for the award of the degree of Master of Science (Construction Contract Management)
Faculty of Built Environment Universiti Teknologi Malaysia
JUNE 2007
iii
Dedicated to my personal Lord and Saviour Jesus Christ and to my beloved parents and siblings.
iv
ACKNOWLEDGEMENTS
First of all, I would like to express my gratitude to my supervisor, Assoc. Prof. Dr Rosli Abdul Rashid for his guidance and advice in order to complete this master project. A special thanks to all the lecturers for the course of Master of Science (Construction Contract Management), for their patience and kind advice during the process of completing the master project.
A debt of gratitude is owed to many individuals who have also given me support, help and tolerance in writing and completing this master project. Not forgetting my dearest parents and siblings for their unconditional love and support. Lastly, I would like to express my thanks to my fellow course mates, who have in their own way helped me a great deal throughout the preparation and production stages of this master project. Care and concern from my house mates are also greatly appreciated.
v
ABSTRACT
Time is an extremely important issue in construction. Timely completion of the construction works by the contractor is of great importance to the employer. Therefore, most construction contracts specify time for performance in achieving completion of the works. However, during the execution of the contract, circumstances may arise which render that completion date unenforceable. At common law, the contractor’s obligation to complete the works by the specified date is removed if the employer delays the contractor in the execution of the works. When the specified completion date no longer applies, time is said to be “at large”, and the contractor’s obligation is merely to complete the works within a reasonable time. What does it mean by reasonable time? It is most certainly not “as and when the contractor sees fit”. The study is aimed at determining the meaning of “reasonable time” when time is at large. Findings of this study will assist contractors to assess a reasonable time to complete the works when time at large occurs. The approach adopted in this research is case law based. There are no limitations as for the court cases referred to in this study in terms of type of projects as long as the case is related to reasonable time. A total of ten cases centered on what is a reasonable time were studied. Through the analysis of courts’ judgments, the meaning of “reasonable time” when time at large occurs was determined. “Reasonable time” means reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him and excluding circumstances which were under the control of the contractor, considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control.
vi
ABSTRAK
Masa merupakan satu isu yang penting di dalam pembinaan. Kerja pembinaan yang disiapkan oleh kontraktor tepat pada masanya adalah satu aspek yang amat penting kepada majikan. Oleh itu, kebanyakan kontrak pembinaan menetapkan masa untuk penyiapan kerja. Bagaimanapun, ketika perlaksanaan kontrak, keadaan-keadaan yang tertentu mungkin timbul dan menyebabkan tarikh penyiapan tidak boleh dikuatkuasakan. Di dalam ‘common law’ kewajipan kontraktor untuk menyiapkan kerja pada masa yang ditetapkan akan dibatalkan sekiranya majikan melambatkan kontraktor dalam perlaksanaan kerja. Apabila masa penyiapan kerja yang ditetapkan tidak dapat dikuatkuasakan lagi, situasi ‘time at large’ akan berlaku dan tanggungjawab kontraktor hanyalah menyiapkan kerja dalam masa yang wajar. Apakah makna masa yang wajar? Pastilah bukan “sebagaimana dan apabila kontraktor rasa sesuai”. Kajian ini adalah untuk menentukan makna “masa yang wajar” apabila keadaan ‘time at large’ berlaku. Dapatan kajian ini akan membantu kontraktor untuk menilai apakah masa yang wajar untuk penyiapan kerja apabila situasi ini berlaku. Pendekatan yang digunakan dalam kajian ini adalah berdasarkan kes undang-undang. Kes mahkamah yang dirujuk di dalam kajian ini tidak dibataskan dari segi jenis projek, asalkan kes-kes tersebut berkaitan dengan masa yang wajar. Sebanyak sepuluh kes yang berkaitan dengan masa yang wajar telah dikaji. Melalui analisis keputusan mahkamah, makna “masa yang wajar” dapat ditentukan. “Masa yang wajar” bermakna wajar di bawah keadaan yang wujud, mengandaikan bahawa keadaan yang berkaitan dengan kelewatan tersebut bukan disebabkan olehnya dan tidak termasuk keadaan yang di bawah kawalan kontraktor, mempertimbangkan apa yang di bawah keadaan biasa merupakan masa yang wajar untuk penyiapan kerja dan seterusnya mempertimbangkan sejauh mana masa untuk menyiapkan kerja adalah dilengahkan oleh keadaan luar biasa di luar kawalannya.
vii
TABLE OF CONTENTS
CHAPTER
1.0
TITLE
PAGE
DECLARATION
ii
DEDICATION
iii
ACKNOWLEDGEMENTS
iv
ABSTRACT
v
ABSTRAK
vi
TABLE OF CONTENTS
vii
LIST OF TABLES
x
LIST OF CASES
xi
LIST OF ABBREVIATIONS
xv
INTRODUCTION 1.1
Background Studies
1
1.2
Problem Statement
5
1.3
Objective of the Research
6
1.4
Scope of the Research
6
1.5
Significance of the Research
7
1.6
Research Methodology
7
viii 2.0
TIME AT LARGE 2.1
Introduction
9
2.2
Standard Form Provisions
10
2.2.1
Public Works Department (P.W.D) Form 203A (Rev. 10/83)
2.2.2
Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
2.2.3
2.4
2.5
12
Federation Internationale des Ingenieurs Conseils (FIDIC) Construction Contract (1999)
2.3
10
14
Time for Completion
15
2.3.1
16
Time of the Essence
Damages for Late Completion
19
2.4.1
20
Liquidated Damages
Extension of Time
22
2.5.1
Purposes of Extension Provisions
22
2.5.2
Grounds for Extension of Time
24
2.5.2.1 Force Majeure
24
2.5.2.2 Variations and Extra Works
26
2.5.2.3 Exceptionally Adverse Weather Conditions
2.6
27
2.5.2.4 Late Possession of Site
28
2.5.2.5 Sub-contractors
29
2.5.2.6 Delay in Approvals and Instructions
29
2.5.2.7 Other Commonly Stipulated Grounds
30
2.5.2.8 Causes beyond the Contractor’s Control
31
Time at Large
31
2.6.1
Events Giving Rise to Time at Large
32
2.6.1.1 No Time or Date Fixed in the Contract
35
2.6.1.2 Time or Date Ceases to Apply by Acts of Prevention
2.7
36
2.6.1.3 Waiver
43
2.6.1.4 Failure of Contractual Machinery
44
Conclusion
45
ix 3.0
REASONABLE TIME 3.1
Introduction
47
3.2
Reasonable Time
49
3.3
Statutory Provisions that Apply the term
3.4
4.0
“Reasonable Time”
54
3.3.1
Sale of Goods Act 1957 (Revised 1989)
54
3.3.2
Supply of Goods and Services Act 1982 (UK)
55
3.3.3
International Sales
56
Conclusion
57
REASONABLE TIME WHEN TIME IS AT LARGE 4.1
Introduction
59
4.2
Reasonable Time when Time is at Large
60
4.2.1
Reasonable Time Where No Time for Completion is specified in the Contract/ Contract is Silent as to Time
4.2.2
60
Reasonable Time where the Stipulated Date Has ceased to be Applicable by Reason of Prevention or Breach
4.3
5.0
Conclusion
68 78
CONCLUSION AND RECOMMENDATIONS 5.1
Introduction
80
5.2
Summary of Research Findings
80
5.3
Problems Encountered during Research
82
5.4
Conclusion
82
REFERENCE
83
BIBLIOGRAPHY
85
x
LIST OF TABLES
TABLE NO TITLE
4.1
Reasonable time where no time for completion is specified in the contract/contract is silent as to time
4.2
PAGE
73
Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach
76
xi
LIST OF CASES
CASES
PAGE
A Bell & Son (Paddington) Ltd v CBF Residential Care and Housing Association. (1989) 46 BLR 105
11
Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy & Anor. [1996] 3 MLJ 385, HC
17
Afovos Shipping Co v Pagnan [1983] 1 WLR 195 at 201 (HL)
10
Amalgamated Building Contractors Ltd v Waltham Holy Cross Urban District Council [1952] 2All ER452 at 452 (CA).
36
Amherst v James Walker [1983] Ch 305 at 315 (CA)
48
Arab Malaysian Corpn Builders Sdn Bhd v ASM Development Sdn Bhd. [1998] 6 MLJ 136
20
Astea (UK) Limited v Time Group Limited [2003] EWHC 725 (TCC)
43
Attwood v Emery (1856), 1 CB (NS) 110; 26 LJCP 73
54
Ayadurai v Lim Hye [1959] MLJ 143
17
Balfour Beatty Building Ltd v Chestermount Properties Ltd 62 Build LR 1
45
Barque Quilpue Ltd v Bryant (1904)
36
Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium (No 2) [1998]
44
BFI Group of Companies Ltd v DCB Integration Systems Ltd [1987] CILL 328 Bilton v Greater London Council (1982) 20 BLR 1, HL
11 23, 42
xii CASES
PAGE
British and Commonwealth Holdings plc v Quadrex Holdings Inc. [1989] QB 842; [1989] 3 All ER 492, CA
16
British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504, 24 Build LR 94.
64
Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd (1989) 51 BLR 16
2
CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors [2001] HKCU 916
69
Chaffer and Tassie v Richards (1905) 26 NLR 20.
27
Charles Rickards Ltd v Oppenheim [1950] 1 KB 616.
43
Charnock v Liverpool Corporation [1968] 1 WLR 1498 (CA)
48
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd [1989] 1 MLJ 308, HC.
18
Dodd v Churton [1897] 1 QB 562 (CA).
42
Earth & General Contractors Ltd v Manchester Corporation (1958) 108 LJ 665
28
Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd [1955] 1 Lloyd’s Rep. 303
69
Fairclough v Rhuddlan Borough Council (1985).
29
Felton v Wharrie (1906)
28
Fisher v Ford (1840), 12 Ad. & El. 654
59
Ganam d/o Rajamany v Somoo s/o Sinnah [1984] 2 MLJ 290.
18
Gaymark Investments Pty Ltd v Walter Construction Group (1999) NTSC 143, (1999) 16 BCL 449; (2005) 21 Const LJ 70 Greater
London
Corporation
v
Cleveland
Bridge
Engineering (1984) 34 BLR 57
33
and 48
Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd [1999] 1 MLJ 65. Holme v Guppy (1838) 3 M&W 387
19 4, 22, 28, 36
Hydraulic Engineering Co Ltd v McHaffie, Goslett & Co. (1878) 4 QBD 670 Ismail bin Haji Embong v Lau Kong Han [1970] 2 MLJ 213
52, 54 17
xiii CASES
PAGE
J and J Fee Ltd v The Express Lift Company Ltd [1993] 34 ConLR 147.
36
Jamshed Khodaram Irani v Burjorni Dunjibhai (1915) LR 43 IA 26
17
Kenny and Hingles’ Trustee v Union Government (1928) TD 272
27
Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12
17
LeBaupin v Crispin [1920] 2 KB 714.
25
Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89
21
Lombard plc v Butterworth [1987] Q.B. 27 at 535 (C.A.)
20
Lyle Shipping Co. v Cardiff Corporation [1900] 2 QB 638
54
Maniam v The State of Perak [1975] MLJ 75
21
Meyer v Gilmer (1899) 18 NZLR 129
42
Mohamed Habidullah v Bird & Co. AIR 1922 PC 178
17
Murdoch v Lockie (1897) 15 NZLR 296
42
Neodox Ltd v Swinton and Pendlebury Borough Council (1958) 5 BLR 34
53
North West Metropolitan Regional Hospital Board v Bickerton (1970) Panamena
29 Europea
Navigacion
(Compania
Limitada)
Frederick Leyland & Co Ltd [1947] AC 428 (HL). Pantland Hick v Raymond & Reid [1893] AC 22.
v 32, 45 60
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 Percy Bilton v Greater London Council [1982] 1 WLR 794 Raineri v Miles [1981] AC 1050 (HL)
13, 29, 39 29, 38 48
Rapid Building Group v Ealing Family Housing Association Ltd (1984) 29 BLR 5
4, 13, 22, 28, 39
Rickards v Oppenheim [1950] 1 KB 616
69
Russell v Viscount Sa da Bandeira (1862) 13 CB (NS) 149
42
Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. Sims & Co. v Midland Railway Co. [1913] 1 KB 103
17, 21 63
xiv CASES
PAGE
Shawton Engineering Ltd v DGP International Ltd [2005] EWCA Civ 1359.
70
SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391; (1984) 1 Const LJ 159 Startup v Macdonald (1843), 6 Man. & G. 593
36, 42 59
Tan Ah Kian v Haji Hasnan [1962] MLJ 400, HC; [1963] MLJ 175, FC.
18
Taylor v The Great Northern Railway Company [LR] 1 CP 385.
62
Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30
12
Tew v Newbold-on Avon School Board (1884) 1 C&E 260
42
Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd [1993] 3 MLJ 25
21
The Lyle Shipping Company Ltd v The Corporation of Cardiff [1900] 2 QB 638.
62
Thornhill v Neats (1860) 8 CB (ns) 149
42
Trollope & Colls Ltd v NW Metropolitan Regional Hospital [1973] 1 WLR 601 (HL)
42
United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 All ER 62, HL, [1978] AC 1050 (HL) Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118
3, 16 17, 18
Walter Lawrence v Commercial Union Properties (1984) 4 ConLR 37.
27
Wells v Army and Navy Cooperative Society (1902) 86 LT 764
41
Westwood v Secretary of State for India (1863) 7 LT 736
42
xv
LIST OF ABBREVIATIONS
AC
Law Reports Appeal Case
All ER
All England Law Reports
ALJ
Australian Law Journal
ALR
Australian Law Reports
ALJR
Australian Law Journal Reports
App Cas
Appeal Cases
B
Beavan
B&S
Best and Smith’s Reports
Build LR
Building Law Reports
CA
Court of Appeal
CB
Common Bench Reports
Ch
Chancery
Ch App
Chancery Appeal
Ch D
The Law Reports, Chancery Division
CIDB
Construction Industry Development Board
CLD
Construction Law Digest
DC
Divisional Court, England
Const LJ
Construction Law Journal
Const LR
Construction Law Reports
CP
Law Reports, Common Pleas
CPD
Law Reports, Common Pleas Division
DLR
Dominion Law Reports
Exch
Exchequer Reports
Eq
Equity Case
EWHC
High Court of England anf Wales Decisions
xvi FC
Federal Court
F&F
Foster & Finlayson’s Reports
H&N
Hurlstone & Norman’s Exchequer Reports
HL
House of Lords
HKC
Hong Kong Cases
HKLR
Hong Kong Law Reports
IR
Irish Reports
JKR
Jabatan Kerja Raya
KB
King Bench
LGR
Local Government Reports
LJKB (QB)
Law Journal Reports, King’s (Queen’s) Bench
Lloyd’s Rep
Lloyd’s List Reports
LR
Law Reports
LT
Law Times Reports
JP
Justice of the Peace / Justice of the Peace Reports
MLJ
Malayan Law Journal
NZLR
New Zealand Law Reports
PAM
Pertubuhan Arkitek Malaysia
PWD
Public Work Department
PD
Probate, Divorce and Admiralty Division of High Court
QB
Queen Bench
TCC
Technology and Construction Court
SLR
Singapore Law Reports
WLR
Weekly Law Reports
WR
Weekly Reports
CHAPTER 1
INTRODUCTION
1.1
Background Studies
Time is an extremely important issue in construction. Together with cost and quality, it is a primary objective of project management, and a major criterion by which the success of a project is judged. The scope of this subject includes three basic time-related issues which are commencement, progress and completion (Murdoch and Hughes, 2000). This may be seen from clause 21.1 of PAM 98:
On the Date of Commencement stated in the Appendix, possession of the site shall be given to the Contractor who shall thereupon begin the Works, and regularly and diligently proceed with the same and complete the same on or before the Date for Completion stated in the Appendix subject to any extension of time in accordance with Clause 23.0 and/or sub-clause 32.1(iii).
clause 38(b) of PWD 203A which states:
2
Unless the Contract Documents shall otherwise provide, possession of the Site as complete as may reasonably be possible but not so as to constitute a tenancy, shall be given on or before the “Date of Possession” stated in the Letter of Acceptance of Tender to the Contractor who shall thereupon and forthwith commence the Works (but subject to sub-clause (a) hereof) and regularly and diligently proceed with and complete the Works on or before the Date of Completion as stated in the Appendix.
and clause 23.1 of JCT 98, which states:
On the Date of Possession possession of the site shall be given to the contractor who shall thereupon begin the Works, regularly and diligently proceed with the same and shall complete the same on or before the Completion Date.
Contracts of all kinds commonly specify a date for the performance of some obligation (Wallace, 1995). Where it comes to building contracts, stipulated periods are provided within which the buildings have to be delivered became an essential condition of the agreement (Guest, 1975). It is usual to name the date by which completion is required, as can be seen in Clause 39 of PWD 203A. Even where no precise date has been included in the contract itself, a court may be persuaded to imply a term for completion by a certain date, on the ground that the parties must have intended this, as seen in Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd 1 .
The contractor’s obligation to complete the works by the
completion date is, like all such obligations, backed up by legal sanctions. Under certain types of contract (for example contracts for the sale of perishable goods), time is expressly or impliedly “of the essence”. Consequently, the employer’s remedy for any lateness in performance or completion will be an award for damages for breach of contract (Murdoch and Hughes, 2000).
1
(1989) 51 BLR 16.
3
Under what circumstances can time be held to be of the essence of a contract? According to Chow (2004), in United Scientific Holdings Ltd v Burnley Borough Council2 , the House of Lords, citing with approval a statement on the position in Halsbury’s Laws of England (4th Ed), ruled that time should not be held to be of the essence unless the following conditions are present:
1. The parties must have expressly stipulated in the contract that conditions as to time should be strictly complied with
2. The nature of the subject-matter of the contract and the surrounding circumstances demonstrate that time should be considered to be of the essence
3. The party who has been subjected to unreasonable delay gives notice to the party in default making time of the essence
Section 56 (3) of Contract Act 1950 states the effect of acceptance of performance at time other than agreed (the completion date which is also the essence of the contract) upon, which reads:
If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of the promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of the acceptance, he gives notice to the promisor of his intention to do so.
The position in the rules contained in section 56 (3) of the Contracts Act 1950 is that: if in a contract in which time is of the essence, a party fails to perform it by the stipulated time, the innocent party has the right either to rescind the contract, or to treat it as still subsisting. If he treats it either expressly or by conduct as still 2
[1977] 2 All ER 62, HL, [1978] AC 1050 (HL),
4
continuing, the contract exists but time ceases to be of the essence and become at large. Consequently he cannot claim liquidated damages under the contract unless there is a provision as to the extension of time. However, this cessation can be revived and so time can be restored to be the essence by the innocent party serving a notice to the party in default giving a new date of completion. If this is done, there would be a date from which liquidated damages could be calculated (Sinnadurai, 1987).
At common law, the contractor’s obligation to complete the works by the specified date is removed if the employer delays the contractor in the execution of the works. When the specified completion date no longer applies, time is said to be “at large”, and the contractor’s obligation is merely to complete the works within a reasonable time. A fundamental point is that the time for completion can only be extended where the contract permits, and strictly in accordance with the contract provisions (Murdoch and Hughes, 2000). It is a common belief in the construction industry that extensions of time are solely for the benefit of the contractor. At face value by giving the contractor more time to complete the works and by reducing his liability for liquidated damages they do appear to be one-sided.
It is not the
contractor who has most need of extension of time provisions, it is the employer. A string of well documented cases from Holme v Guppy3 to Rapid Building v Ealing4 confirm that the courts will not uphold liquidated damages where the employer has prevented completion on time unless there is express provision in the contract to extend time for the employer’s default (Eggleston, 1992).
The ultimate dispute on a construction contract is for an employer to assert that time is of the essence and to determine without paying whilst the contractor is claiming time to be at large and determining for non-payment (Eggleston, 1992).
3 4
(1838) 3 M&W 387. (1984) 29 BLR 5.
5
Problem also arises in the wording employed by many of the standard forms of contract as there was a shortcoming in that some of them did not fully cater in the extension of time clause for all delays caused by the employer. General sweep-up wording in an extension of time clause (such as “or other unavoidable circumstances”) has been held by the English courts not to cover employer defaults. Similarly in Malaysia, only PAM 98 Clause 23.7(xi) allows the Architect to grant an extension of time for “any act of prevention or breach of contract by the Employer.” This is designed to be a “catch-all” provision so that time does not inadvertently become at large. Other forms like IEM, PWD 203A and CIDB do not have such similar provision (Martin, 2005). Thus, time will be at large when the employer causes delay to the contractor e.g. by ordering extra work and there is no provision for extension of time for the contractor.
1.2
Problem Statement
The phrase “time at large” is much loved by contractors, the suggestion that the contractor has as much time as he wants to finish the works. This is not what it means. Time becomes at large when the obligation to complete within the specified time for completion of a contract is lost. The obligation then becomes to complete within a reasonable time. It is most certainly not “as and when the contractor sees fit”. The question then is what is a reasonable time? What is generally at stake in the matter of whether or not time is at large is the employer’s right to deduct liquidated damages for late completion. The right is lost completely if time becomes at large – the employer can still sue for general or unliquidated damages for late completion – but regard will then had to be the contractor’s entitlement to a reasonable time (Eggleston, 1992).
6
Time being “at large” does not mean that the Contractor has no obligation to complete the work. He has to complete in a “reasonable time”. What is reasonable will depend on all the circumstances at the time (Murdoch and Hughes, 1992). Calculating a reasonable time is not an easy matter and, as Emden’s Building Contracts, puts it:
When a reasonable time for completion becomes substituted for a time specified in the contract ….then in order to ascertain what reasonable time is, the whole circumstances must be taken into consideration and not merely those existing at the time of the making of the contract.
1.3
Objective of the Research
The objective of this study is to determine the meaning of “reasonable time” when time is at large.
1.4
Scope of the Research
The approach adopted in this research is case law based. There are no limitations as for the court cases referred to in this study in terms of type of projects as long as the case is related to time at large and reasonable time. The standard forms of contract that will be referred to are: 1. Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
7
2. Public Works Department (P.W.D) Form 203A (Rev. 10/83)
3. Construction Industry Development Board (CIDB) Standard Form of Contract for Building Works (2000 Edition)
4. International
Federation
of
Consulting
Engineers
/
Federation
Internationale des Ingenieurs Conseils (FIDIC) Construction Contract (1999)
1.5
Significance of the Research
This research should give a review to contractor and employer as to what is time at large and when does it apply. When the parties in the industry are equipped with the knowledge of time at large and its implications on both contractor and employer, this situation can be avoided as much as possible. Suggestion on what is a reasonable time to complete the works in the event of time at large is also provided for through this research.
1.6
Research Methodology
This research involved literature review on time-related matters in the construction industry. Initial study will be carried out involving extensive reading and understanding of the concepts involved.
Then data and information collecting will be carried out. Primary source will be law cases found in Malayan Law Journal through the access of Lexis Nexis
8
available in the university’s online database. Secondary sources such as articles, journals, textbooks and related websites will also be studied and referred to in the course of the whole research.
Analysis will be done on collected information and will be arranged in an orderly manner. Finally, writing up will be carried out, followed by checking and correction of writing.
CHAPTER 2
TIME AT LARGE
2.1
Introduction
Most construction contracts specify time for performance in achieving completion of the whole of the works and many have additional requirements for phased or sectional handovers. Time may be fixed either by reference to specified dates or by reference to a construction period. If the latter method is used it is essential that a precise completion date can be established. This means that there must be an identifiable commencement date from which time runs and there must be no uncertainty on whether the construction period takes in or excludes holiday periods. These may seem obvious matters but it is extraordinary how often in construction industry disputes it is found that the intentions of the parties in respect of time have not been clearly expressed or have been misapplied. (Eggleston, 1992).
Similarly, according to Chow (2004), a date is fixed from which the time for completion begins to run. Frequently, this is the date on which the contractor takes possession of the site, but this is by no means the rule. In large and elaborate
10 projects, it is not always possible for the owner to afford the contractor unencumbered possession of the whole site and it is quite common in these situations for the contract to provide that time for completion begins to run from some stipulated date in lieu of the date of site possession. As an alternative to stipulating the period within which the works have to be completed, a contract may provide that the contractor’s obligation is to complete the works on or before a particular date. Thus, instead of stipulating that the works shall be completed within 24 months from 1 January 2003, a construction contract may merely provide that the works shall be completed on or before 31 December 2004. In this case, the contractor has the whole of the period up to the end of the stipulated day of completion to perform his obligation.5
2.2
Standard Form Provisions
Construction contracts usually contain elaborate provisions stipulating the time within which the contractor is required to complete the construction of the works, as well as the conditions under which such time may be extended. Standard form provisions related to commencement and completion of works, damages for non-completion and extension of time is looked into.
2.2.1
Public Works Department (P.W.D) Form 203A (Rev. 10/83)
Subject to any requirement for completion in parts or sections in the Contract, clause 39(a) basically reiterates the obligation of the Contractor to complete the
5
Afovos Shipping Co v Pagnan [1983] 1 WLR 195 at 201 (HL).
11 whole of the Works by the Date for Completion as stated in the Appendix or such extended time as granted by the Superintending Officer (Lim, 2004).
Clause 40 provides the machinery whereby the Government and the Contractor can agree in advance the damages to be payable by the Contractor if the Contractor fails to complete by the Date for Completion or within any extended time granted by the Superintending Officer.
This agreed damages expressed as
Liquidated and Ascertained Damages is provided in the Contract to negate the necessity of the Government having to prove the actual loss suffered in the event of the Contractor’s breach for delayed completion.6 In other words, it is designed to allow the Government to sue for or deduct the Liquidated and ascertained Damages simpliciter from the money due to the Contractor.
The enforceability of this
provision is subject to section 75 of the Contracts Act 1950 which reads:
When a contract is broken, if a sum is named in the contract as to the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the other party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
Lim (2004) also noted that although not specifically stated in clause 40, it is implicit that the Superintending Officer should only issue the Certificate of Noncompletion after he has fully evaluated and granted the appropriate extension of time (if any) to the Contractor pursuant to clause 43.7 In addition, it is essential that the rate for Liquidated and Ascertained Damages is clearly inserted in the Appendix. The clause is not enforceable and no amount can be recovered by the Government if 6
See BFI Group of Companies Ltd v DCB Integration Systems Ltd [1987] CILL 328. See A Bell & Son (Paddington) Ltd v CBF Residential Care and Housing Association (1989) 46 BLR 105. If a new completion date is fixed and the contractor has not completed by that date, it is implicit that a non completion certificate to that effect must be issued by the architect whether or not a certificate had been issued in relation to an earlier and superseded completion date. 7
12 it is omitted. In this case, the Government would have to resort to claim general damages against the Contractor for delayed completion.
However, if “NIL” is
inserted as the rate, it would be construed to constitute an agreement by the parties that no damages would be payable by the Contractor and the Government would be precluded from even claiming general damages against the Contractor for delayed completion.8
Clause 43 provides for the Superintending Officer to grant an extension of time on specified grounds and an extension of time is grantable on those grounds and no other. The Superintending Officer has no inherent power to extend the time for completion and in the absence of an express provision such as this clause he would have no power to do so. This clause is an improvement over the extension of time clause in the PAM (1969 edition) form of contract which contained limited grounds for extending time and did not cover many common delaying events, such as failure to give possession of site on the due date.
2.2.2
Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
According to Rajoo (1999), clause 21 of PAM 1998 Form is one of the most important clauses in the contract. It provides for the employer to give site possession in whole or parts by appropriately designating the Date of Commencement or Dates of Commencement. This enables the contractor to be given site possession in one go or alternatively by defined sections based on the needs of the employer.
The
contractor’s primary obligation is to complete the Works by the contractual date for completion. As his secondary obligation, the contractor is then to begin the Works and proceed ‘regularly and diligently’ so as to complete the Works ‘on or before’ the completion date set out in the Appendix of the PAM1998 Form.9 He has the whole 8 9
Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30. Clauses 21.1 and 21.2 of the PAM Contract.
13 period between the Dates of Commencement and Completion to carry out and complete the Works in a manner he considers best.10 The Dates of Commencement and Completion must be specified in the Appendix and, subject to the grant of any extension of time under clauses 23 or 32.1(iii) of the PAM 1998 Form (the latter clause permits an extension of time for reinstatement of war damage), the contractor is bound to complete the work by the specified Date for Completion. Clauses 21.2 and 21.3 go on to cure the inadequacy of the PAM 1969 Form in dealing with commencement and completion in phases. If the employer requires the work to be completed in parts, these two clauses set out the mechanics of how the contractor can be obligated to complete the Works in part. Clause 21.4 empowers the architect to issue instructions requiring the postponement of any work to be executed under the contract. The employer or the architect may be forced by circumstances to call for delay in the whole or part of the Works. Without this express power, the architect would have no power to control the contractor’s order of working.
Clause 22 on damages for non-completion provides machinery whereby the parties can agree in advance the damages payable by the contractor and recoverable by the employer if he fails to complete the Works by the Date/s for Completion stated in the Appendix, or within any extended period certified by the Architect under clauses 23 or 32.1 (iii). Both liquidated damages and extension of time clauses will be construed strictly contra proferentem against employer if there is any doubt as to the construction of the provision11 (Rajoo, 1999).
Clause 23 on extension of time of the PAM 1998 Form is aimed at allocating the risks of non-completion between the parties. It reduces the contractor’s risk in relation to delays by entitling him to an extension of time for practical completion on account of delay based on various circumstances, putting back the date on which liquidated damages will start to apply. It is the main provision under which any alteration to the Date for Completion can be made and refers to an extension of time
10 11
Supra note 4. See Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111.
14 meaning a lengthening of the period within which the Works have to be completed (Rajoo, 1999).
2.2.3
Federation Internationale des Ingenieurs Conseils (FIDIC) Construction Contract (1999)
Clause 8 of the FIDIC Construction Contract includes provisions for commencement and completion of works, delay damages and extension of time, all in one clause. The engineer shall give the Contractor not less than 7 days’ notice of the Commencement Date. Unless otherwise stated in the Particular Conditions, the Commencement Date shall be within 42 days after the Contractor receives the Letter of Acceptance.12 The Contractor then has the obligation to complete the whole of the Works and each Section, if any, within the Time for Completion including achieving the passing of the Tests on Completion and completing all work which is stated in the Contract as being required for the Works or Section to be considered to be completed.13
If the Contractor fails to comply with the Time for Completion, the Contractor is subject to pay delay damages to the Employer for this default. These delay damages shall be the sum stated in the Appendix to Tender, and payment is provided to be made on daily basis. However, the total amount due cannot exceed the maximum amount of delay damages (if any) stated in the Appendix to Tender. The delay damages do not relieve the Contractor from his obligation to complete the Works, or from any other duties, obligations or responsibilities which he may have under the contract.14
12
Clause 8.1 of the FIDIC Form. Clauses 8.2(a) and 8.2(b) of the FIDIC Form. 14 Clause 8.7 of the FIDIC Form. 13
15 FIDIC Form has a provision in clause 19 which elaborates on force majeure, such as the definition of force majeure, notice of force majeure, its consequences and release from performance under the law. Such a provision is not found in other standard forms of building contract such as PWD 203A, PAM 1998 and CIDB 2000.
2.3
Time for Completion
According to Eggleston (1992), building forms usually specify a date for completion in the appendix whereas civil engineering forms usually specify a time for completion. The date for completion is therefore calculated from a date for commencement given by the engineer. In both cases, procedural variations are often introduced and the objective of establishing a precise date for completion can be lost. For example, tenderers are commonly allowed to give their own preferred times for completion or to offer an alternative to that specified in the tender documents. However, if the contractor is allowed to fix his own time, it is necessary that this time is linked in the contract documentation to either a start date or a completion date. Without one or the other there will be no firm date for completion. Similar problems in fixing the date for completion with certainty can arise when extensions of time are granted. Differences of approach in various standard forms of contract may be in part responsible. The danger of granting periods of time instead of fixing new dates is that uncertainty can be created as to whether such periods, particularly where they are expressed in days, cover working days only or include weekends and holidays.
16 2.3.1
Time of the Essence
Section 56(1) of the Contracts Act provides that failure to perform within a fixed time in a contract, where time is essential, would render the contract voidable. When time is of the essence in a contract, failure to complete by the specified date is a breach of a condition entitling the innocent party to treat the contract as repudiated. If the contract is a supply contract and the goods are offered late, acceptance of the goods can be refused. If the contract is a construction contract and the contractor fails to finish on time, the employer is entitled to dismiss the contractor from the site and has no liability for payment for the unfinished work. However, this is not the usual position in a construction contract. Finishing late does not normally entitle the employer to dismiss the contractor from the site; it is a breach of warranty and damages are the employer’s remedy. Nor does finishing late normally excuse the employer from payment for unfinished work. The question then is what governs whether or not time is of the essence in contracts. (Eggleston, 1992).
Sinnadurai (2003) noted as well that difficulties remain in determining when time would be regarded as of the essence of the contract. At common law, time was always regarded as of the essence of the contract in the sale of land. However, equity did not take such a strict view. This attitude of equity towards time, did not apply in cases when the parties had expressly agreed that time should be of the essence. The exceptions to the common law rule that ‘time is always of the essence of the contract’ were discussed by the House of Lords in United Scientific Holdings v Burnley Borough Council
15
and by the Court of Appeal in British and
Commonwealth Holdings plc v Quadrex Holdings Inc.16 The common law rule has been assimilated by equity so that a court will examine the whole scope of the transaction to decide whether the parties really meant the time stipulated to be of the essence of the contract. Section 56 of the Contracts Act appears to follow the English law whereby the rules contained in the section are not different from the
15 16
Supra note 2. [1989] QB 842; [1989] 3 All ER 492, CA.
17 position arrived at in common law.17 Section 56 is the most invoked provision of the Contracts Act dealing with time and the scope of this section has been considered in a number of cases.18 The position is if in a contract in which time is of the essence, a party fails to perform it by the stipulated time, the innocent party has the right either to rescind the contract, or to treat is as still subsisting. If he treats it either expressly or by conduct as still continuing, the contract exists but time ceases to be of the essence and becomes at large. Consequently he cannot claim the liquidated damages under the contract unless there is a provision as to the extension of time. However, this cessation can be revived and so time can be restored to be of the essence by the innocent party serving a notice to the party in default giving a new date of completion.19
The law relating to time for performance under the Contracts Act was dealt with exhaustively by Visu Sinnadurai J in Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy & Anor.20 Time, in a contract for the sale of land, is of the essence in two main situations; firstly where the intention of the parties was such that the time was of the essence of the contract for the fulfillment of their respective obligations and secondly, where the nature of the subject matter or the surrounding circumstances are such that the time specified for the performance is of the essence. There is little difficulty in considering whether time is of the essence of a contract if there is an express provision in the contract itself stating that it is so. In contracts where the phrase ‘time is of the essence’ is employed, it is generally accepted that the parties in these cases have clearly intended that the provision dealing with time is an essential term of the contract. In such cases, both parties must perform their respective obligations within the time stipulated.
Where there is no express
provision in the contract making time of the essence, the courts will then have to consider the nature of the property, the surrounding circumstances and the nature of the contract to determine whether time was intended by the parties to be the essence 17
Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118. See also Jamshed Khodaram Irani v Burjorni Dunjibhai (1915) LR 43 IA 26 (section 55 of the Indian Contract Act is similar to section 56 of the Malaysian Act). 18 See Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12; Ismail bin Haji Embong v Lau Kong Han [1970] 2 MLJ 213; Ayadurai v Lim Hye [1959] MLJ 143. See also the Privy Council decision of Mohamed Habidullah v Bird & Co. AIR 1922 PC 178. 19 Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. 20 [1996] 3 MLJ 385, HC.
18 of the contract. In Yeoh Kim Pong Realty Ltd v Ng Kim Pong 21 time was not expressly stated to be of the essence. It was held that considering the intention of the parties, and on an ‘examination amongst other things of attendant circumstances’, time was of the essence of the contract in question. It was also pointed out by the judge, as seen in the case of Ganam d/o Rajamany v Somoo s/o Sinnah22 that the mere stipulation of a date fixed for completion in a contract does not, by itself, make time to be of the essence of the contract.
The nature of the property and the
surrounding circumstances would still have to be considered in such cases.
The general principles regarding time were also spelt out by Gill J in the case of Tan Ah Kian v Haji Hasnan.23 There are three situations whereby time is of the essence of the contract: (i) where the parties have expressly stipulated in the contract that it shall be so; (ii) where it was not originally stated to be but had been made so by giving reasonable notice to the other, who had failed to perform the contract with sufficient promptitude; and (iii) where from the nature of the contract or of its subject matter, time must be taken to be of the essence of the agreement.
In building contracts, time of the essence of the contract is an interesting stipulation encountered frequently. This stipulation is usually inserted by quantity surveyors or engineers in the preliminaries section of the bill of quantities or in some portion of the contract specification. There are occasions where such stipulations in a contract document are intended to be literally construed. Thus, in a contract to construct facilities for a particular event such as a games village for a major sports event, it is clear that the owner will be left with very benefit if the project is delivered after the dates set for the games. (Chow, 2004).
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd24 is a case dealing with late completion of a building, where time was of the essence of the contract. The 21
[1962] MLJ 118. [1984] 2 MLJ 290. 23 [1962] MLJ 400, HC; [1963] MLJ 175, FC. 24 [1989] 1 MLJ 308, HC. 22
19 specific question before the High Court was whether the purchaser ‘could sue for rescission on the agreement [that] … as the house was not completed … [on] the completion date’. In a detailed judgment, Abdul Malek J dealt with relevant case law and statutory law on the subject, particularly, sections 56 and 76 of the Contracts Act. In Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd25 the Court of Appeal also considered the subject in relation to the provisions of Contracts Act 1950. The position, as a result of the operation of section 56(1) of this Act and as set out in the earlier decision of Loke Yuen Cheng & Anor v Vintex Sdn Bhd26, is that where the parties to a contract clearly intends that time is to be of the essence of the contract, then the occurrence of any delay in performance would render the contract voidable at the option of the innocent party. If the innocent party elects to exercise the option, the effect is that the contract is annulled so that the situation is as though it had never existed. In the circumstances, the employer forfeits whatever recourse under the contract, including an action for damages, and can only seek redress through restitution.
2.4
Damages for Late Completion
The contractor’s obligation to complete the works by the completion date is backed up by legal sanctions. Under certain types of contract such as contracts for the sale of perishable goods, where time is expressly or impliedly of the essence, any lateness in performance entitles the other party to determine the contract. However, construction contracts very rarely fall into this category.
Thus, the employer’s
remedy for late completion will be an award of damages for breach of contract. It is standard practice in building and civil engineering contracts to state in advance what the damages shall be for delay, and this is usually done by specifying a fixed sum of money to be due for every day, week or month by which the contractor fails to meet
25 26
[1999] 1 MLJ 65. [1998] 4 MLJ 169.
20 the prescribed completion date. Such sums are called liquidated and ascertained damages or LADs (Murdoch and Hughes, 2000).
Halsbury’s Laws of Malaysia (Building and Construction) also stated that generally, contracts for construction works usually provide that in the event of the contractor’s failure to complete by the date specified for completion, the contractor is to pay a specified sum or that the employer may deduct a specified sum from money due to the contractor.27
2.4.1
Liquidated Damages
Delay in performance is treated as going to the root of the contract without regard to the magnitude of the breach. 28 Damages for a contractor’s failure in breach of contract to complete on time are often subject of a provision for liquidated damages (Furst and Ramsey, 1991).
According to Murdoch and Hughes (2000), a claim for liquidated damages can only succeed where the contract makes express provision for it. Most building contracts contain such a clause. Liquidated damages provisions are in principle perfectly acceptable and they are to be encouraged as they enable the parties to know from the start as much as possible about the risks they bear.
When the LAD are agreed, the employer’s only remedy for late completion by the contractor is a sum not exceeding the specified amount. He does not have an 27
See PAM Conditions of Contract (1998) cl 22; IEM Conditions of Contract cl 40; PWD Conditions of Contract Forms 203/203A cl 40. See also Arab Malaysian Corpn Builders Sdn Bhd v ASM Development Sdn Bhd [1998] 6 MLJ 136. 28 Lombard plc v Butterworth [1987] Q.B. 27 at 535 (C.A.).
21 option of claiming unliquidated damages. Should no date for Completion be inserted in the Appendix, then no liquidated damages will be payable since there is then no date from which liquidated damages can run. There must be a definite date to act as a starting point and if the completion date has passed due to the default of the employer for which no extension of time is given by the architect, the employer’s right to liquidated damages will be lost.29 (Rajoo, 1999).
Section 75 of the Contracts Act 1950 deals with the effect of a sum named in a contract which is payable in cases of breach of contract, and in Malaysia ‘there is no difference between penalty and liquidated damages’. 30 Section 75 of the Act provides:
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
29
See Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151; Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd [1993] 3 MLJ 25. 30 Maniam v The State of Perak [1975] MLJ 75; Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89.
22 2.5
Extension of Time
2.5.1
Purposes of Extension Provisions
According to Eggleston (1992), a contractor is under a strict duty to complete on time except to the extent that he is prevented from doing so by the employer or is given relief by the express provisions of the contract. The effect of extending time is to maintain the contractor’s obligation to complete within a defined time and failure by the contractor to do so leaves him liable to damages, either liquidated or general, according to the terms of the contract. In the absence of extension provisions, time is put at large by prevention and the contractor’s obligation is to complete within a reasonable time. The contractor’s liability can then only be for general damages but first it must be proved that he has failed to complete within a reasonable time. Therefore, extension of time clauses have various purposes which are:
1. to retain a defined time for completion 2. to preserve the employer’s right to liquidated damages against acts of prevention 3. to give the contractor relief from his strict duty to complete on time in respect of delays caused by designated neutral events
It is a common belief in the construction industry that extensions of time are solely for the benefit of the contractor. At face value by giving the contractor more time to complete the works and by reducing his liability for liquidated damages they do appear to be one-sided. It is not the contractor who has most need of extension of time provisions, it is the employer. A string of well documented cases from Holme v Guppy 31 to Rapid Building v Ealing 32 confirm that the courts will not uphold liquidated damages where the employer has prevented completion on time unless
31 32
Supra note 3. Supra note 4.
23 there is express provision in the contract to extend time for the employer’s default. Lord Fraser’s comment in Bilton v GLC33 sums it up:
‘… The general rule is that the main contractor is bound to complete the work by the date for completion stated in the contract. If he fails to do so, he will be liable for liquidated damages to the employer. That is subject to the exception that the employer is not entitled to liquidated damages if by his acts or omissions he has prevented the main contractor from completing his work by the completion date: see, for example, Holme v Guppy (1838) and Wells v Army and Navy Cooperative Society (1902). These general rules may be amended by the express terms of the contract…’
Extension of time clauses are commonly entered into construction contracts essentially for the benefit of the employer, since in the event of prevention or breach by the employer a contractual date for completion may be maintained and the liquidated damages provisions preserved. For an extension of time provision to be effective in such circumstances it must clearly give the means to extend the period for completion (Brewer Consulting, 2005). Chow (2004) also pointed out that under English common law, time extension provisions are regarded as being inserted for the benefit of the employer since they operate to keep alive the liquidated damages provisions in the event of delay caused by the employer’s acts of prevention. The courts have consequently ruled that they are to be interpreted contra proferentum against the employer.
33
(1982) 20 BLR 1, HL.
24 2.5.2
Grounds for Extension of Time
According to Chow (2004), construction contract provisions may either stipulate a list of events in respect of which extensions of time may be granted or, alternatively, adopt a more general formulation. Both approaches should take into account the attitude of the courts in construing time extension clauses. From the employer’s standpoint, it is crucial that the provisions should expressly allow for extensions in respect of delays arising from a breach or act of prevention caused by the employer. The formulation adopted in the major standard forms such as the JCT Contract (1998), ICE Conditions of Contract (7th Ed, 1999) and PAM 1998 is a combination of both approaches. The time extension provision typically lists the common causes of delay in respect of which the employer accepts that time extensions may be granted, followed by a general “catch all” paragraph which is intended to bring within the ambit of the provisions events of delay which have not been specifically stated in the clause. Thus, under clause 44(1) of the ICE Conditions of Contract (1999 Ed), paragraphs (e) and (f) extend the power for extending time to cover “any delay, impediment, prevention or default by the employer” and “other special circumstances of any kind whatsoever which may occur”. A similar approach is used in clause 8.4(e) of the FIDIC Contract (1999).
2.5.2.1 Force Majeure
The expression ‘force majeure’ is of French origin. Under the French Civil Code force majeure is a defence to a claim for damages for breach of contract. It needs to be shown that the event made performance impossible, was unforeseeable and was unavoidable in occurrence and effects (Eggleston, 1992).
According to Chow (2004), the expression force majeure was first used in clause 23(a) of the JCT 63 Form and has since been retained in successive editions of that standard form. In the 1998 edition of the JCT Contract, it is specified as a
25 “relevant event” for the purpose of time extensions under clause 25. The term itself is a curious French expression which is usually considered to cover a host of highly unusual and superhuman events. In the classic case of LeBaupin v Crispin 34 , the court accepted that the “term is used with reference to all circumstances independent of the will of man, and which it is not in his power to control…” It was held to include wars, epidemics and strikes, but a cautionary note was struck in the judgment of that case on the interpretation of a force majeure clause:
… [The force majeure clause] should be construed in each case with close attention to the words which precede or follow it with due regard to the nature and general terms of the contract. The effect of the clause may vary with each instrument…35
Chow (2004) further noted that at first instance, it may be difficult to appreciate the need for the JCT Contract to expressly include force majeure as a ground for time extension. Events such as wars, strikes and inclement weather are already separately listed in the time extension provisions, so that it could be suggested that the expression as used in the JCT form must have been intended to provide for something else. There is no direct authority on this point, but it is highly arguable that the original objective may have been as a general premise to cover any event, other than those specifically mentioned, which resides beyond human anticipation. If so, the conceivable range of events must be a very narrow one and it is not surprising that there has been no reported case on the JCT contract where this ground for time extension has been considered.
Clause 19.1 of the FIDIC conditions provided a more elaborate definition of this expression and defines force majeure as an “exceptional event or circumstance” which satisfies the following criteria:
1. It must be beyond the control of the relying party. 34 35
[1920] 2 KB 714. Ibid.
26 2. The relying party could not have reasonably provided for the event or circumstances before entering into the contract.
3. Having arisen, the relying party could not have reasonably avoided or overcome the said event or circumstance.
4. It must not be substantially attributable to the other party.
A force majeure event under the FIDIC Contract must therefore satisfy all the four conditions prescribed here. In the context of a construction claim advanced by the contractor, the “other party” refers to the employer. Chow (2004) therefore noted that the paragraph appears to envisage that where the claim arises from, say a breach by the employer, it is considered that the contractor will in most cases elect to sue for breach of contract, rather than invoke the force majeure clause since this reduces the onus of proof and is likely to provide him with a more extensive range of reliefs. Clause 19.1 also specifically lists down a number of situations which are deemed to be treated as force majeure which include wars, terrorism, strikes and lockouts and natural catastrophes.
2.5.2.2 Variations and Extra Works
Eggleston (1992) stated that when variations or extra works cause delay to completion, the contractor will have a clear case for extension of time, or if there is no express provision to extend time, the employer will have lost his right to liquidated damages. It is the following types of questions which give rise to arguments. For example, have the variations actually caused delay to completion? Are the extra works really extra?
Could the contractor have accommodated them in his
programme? Some of these matters have been considered previously and others are considered under particular forms but it is worth just noting here that extra quantities are not necessarily the same as extra works and in some forms of contract, it is the contractor and not the employer who takes the risks on quantities.
27 The particular situation where omissions of work may be a premise for a time extension should be noted. Such a situation may arise, for instance, where plant and equipment have already been bought on site and these have been prepared to support the execution of a particular item of work. This item of work is then subsequently omitted, thereby necessitating a new and possibly less productive sequence of work. There is no direct English case authority on this point, but in the South African case of Kenny and Hingles’ Trustee v Union Government36 , it was held that where the language of a time extension provision empowered the engineer to assess the period of delay consequent upon the ordering of extras, it would be reasonable for the engineer to “take into account in deciding as to allowances for such delay the effect of other orders requiring omissions.” (Chow, 2004).
2.5.2.3 Exceptionally Adverse Weather Conditions
This ground of time extension is found in the provisions of most of the major standard forms. The general formulation is that time may be extended only when the contractor can demonstrate that the weather conditions encountered could be properly described as exceptional”. In construing the term “exceptional”, consideration should be given as to whether the weather itself was exceptionally adverse or inclement, so as to give rise to the delay and not whether the magnitude of the delay itself was exceptional.37 It is suggested that this construction is consistent with the intent of this provision in the other standard forms as well.
In Malaysia, the predominant issue with weather conditions, in so far as construction operations are concerned, is the intensity of rainfall. To formulate a case for extension of time on the basis of exceptional rainfall, a contractor has to show, from site records, the number of days in a particular month in which the actual rainfall actually encountered exceeds a prescribed level and this is commonly referred
36
(1928) TD 272 at 289. See also another South African case, Chaffer and Tassie v Richards (1905) 26 NLR 20. 37 Walter Lawrence v Commercial Union Properties (1984) 4 ConLR 37.
28 to as the number of “wet days”. Next, the contractor compares the number of wet days encountered with the number of wet days which are indicated by statistical averages in meteorological records. Exceptional rainfall conditions for a particular month are then established when the number of wet days actually encountered exceed the number of wet days recorded in these meteorological averages. However, it is not sufficient for an applicant for time extension to merely show the incidence of wet days and hence, adverse weather conditions. It is necessary to establish the link between the conditions and the progress of works, and in particular, the contractor has to show that the nature of the construction operations being undertaken during the period of “wet days” in a particular month are indeed operations which are susceptible to the effects of these exceptional rainfall conditions (Chow, 2004).
2.5.2.4 Late Possession of Site
Under common law, an employer is treated to have committed a breach of contract if he fails to give timely possession of site.38 Consequently, to ensure that time will not be set at large in the event of a late handover of site to the contractor, most standard forms expressly includes this event as one of the grounds for time to be extended (Chow, 2004). Eggleston (1992) brought up the issue that whether or not failure by the employer to give possession of site at a time convenient to the contractor is an act of prevention will depend on the wording of the contract. If the contract simply states a date of possession of the site, the contractor is entitled to the whole of the site from the outset; but if the contract specifies phased release of the site, the contractor is obliged to accommodate the restrictions that will impose.
38
See Felton v Wharrie (1906) Hudson’s Building and Engineering Contracts (4th Ed) Vol 2, p 398; Earth & General Contractors Ltd v Manchester Corporation (1958) 108 LJ 665; Rapid Building v Ealing Family Housing (1984) 29 BLR 5; Holme v Guppy (1838) 3 M&W 387.
29 2.5.2.5 Sub-contractors
According to Eggleston (1992), on basic principles delays caused by domestic sub-contractors do not give grounds for extensions of time. Unless there are express provisions in the contract to cover delays so caused or there are other provisions for extensions that can be interpreted to cover sub-contractors, the problems of subcontractor default will rest between the main contractor and sub-contractor. If the contractor is required by the terms of the contract to obtain approval to his subcontractors from the contract administrator and the approval is unreasonably delayed, that could be a breach of contract with the potential to defeat the liquidated damages provisions unless there are extension clauses covering employer’s act of prevention.
Nominated sub-contractors are the cause of many complex disputes, and however much forms of contract attempt to place responsibility for such subcontractors on main contractors, it is very difficult for the employers to avoid sharing some of the responsibility for their delays and defaults. The burden of renomination after default is a heavy one, with the employer bound to avoid delay in renominating and to allow time for rectification of faulty work.39
2.5.2.6 Delay in Approvals and Instructions
The drawings and technical documents provided at the time of contract are frequently insufficient to enable the contractor to carry out all aspects of the works required under the contract. To enable the works to proceed properly, it is usually necessary for the architect or engineer to issue instructions or additional drawings during the course of the works. Most time extension provisions provide for time to be extended where the architect or engineer fails to issue these instructions or drawings in a timely manner. An issue which is closely related to time extensions granted for 39
See North West Metropolitan Regional Hospital Board v Bickerton (1970), Peak v McKinney (1970), Percy Bilton v GLC (1982) and Fairclough v Rhuddlan Borough Council (1985).
30 delays in instructions is the date when the contractor should have contacted or applied to the architect or engineer for these instructions. Most contracts require that the contractor should apply for the relevant approval or instruction at an appropriate juncture during the course of the works.
2.5.2.7 Other Commonly Stipulated Grounds
The major standard forms of contract also allow for the time to be extended in respect of the following events:
1. Strikes and civil commotion which affect the works or affect the manufacture or transportation of goods for use in the works40
2. Disruption arising from actions or policy changes of a government body or statutory organisation41
3. Unexpected market conditions which affect the contractor’s ability to procure labour or materials for the works such as a sudden shortage of aggregates or cement42
4. Opening up for inspection any work covered up or the testing of any work, materials or goods43
40
Clause 25.4.4 of JCT Contract (1998 Ed); clause 23.7(iv) of PAM Form (2nd Ed) (1998); Clause 43(h) of PWD 203A and clause 24.1(c) of CIDB 2000. 41 Clause 25.4.9 of JCT Contract (1998 Ed); Clause 8.5 of the FIDIC Contract (1999 Ed). In the case of the FIDIC Contract, clause 8.5 describes the condition under which this event may qualify for an extension of time under clause 8.4(b). 42 Clause 25.4.10 of JCT Contract (1998 Ed); clause 8.4(d) of FIDIC Contract (1999 Ed). 43 Clause 23.7(x) of PAM Form (2nd Ed) (1998); clause 24.1(h) of CIDB 2000.
31 2.5.2.8 Causes beyond the Contractor’s Control
A final remark should be made on the general category of events which comes frequently under a supposedly “catch all” or “umbrella” ground typically formulated as “any cause beyond the control of the contractor.” Such a provision is not intended to cover delays arising from events which are reasonably foreseeable by the contractor at the time of contract and which could be avoided by reasonable action on the part of the contractor. Thus, it would not cover, for example, delay caused by the contractor’s financial stringency, where this is triggered by the actions of a third party on whom the contractor depends for financial support. There should also be no basis for time to be extended in respect of delays arising from events which are caused by the contractor’s want of competence or judgment. These events include ineffective supervision, insufficient manpower and a failure to plan the work properly (Chow, 2004).
From the authorities that a general expression like “causes beyond the contractor’s control” would not be sufficiently embracing to cover delays associated with some breach or act of prevention by the employer. For this purpose, a separate provision has to be inserted in the time extension clause to cater specifically to these delay events.44
2.6
Time at Large
The standard form building and civil engineering contracts deal with the specification of time to complete in two different ways.
On the one hand, the
building contracts tend to invite the insertion (in the appendix to the building 44
Clause 44(1)(e) of the ICE Conditions of Contract (7th Ed); clause 8.4(e) of the FIDIC Contract (1999); clause 23.7(xi) of the PAM Form (2nd Ed) (1998).
32 contract) of a fixed calendar date for the handover of possession of the site to the contractor coupled with a fixed completion date by which the contract must be practically completed. There, the period between the two dates is described as the contract period which the contractor must carry out and complete the work. On the other hand, the engineering contracts tend to stipulate that the work shall be completed within a specified number of days or weeks from the notice to proceed. The date on which the notice to proceed may be given is then left open for a limited period of time. It is only once the notice to proceed has been given that the contract period can commence and the date for completion can be calculated.
During the execution of the contract, circumstances may arise which render that completion date unenforceable. Of itself, the failure competently to put into effect the contractual machinery to extend the time for completion by the contract administrator is not sufficient to render the completion date unenforceable and time at large. The effect must be that the parties to the contract do not truly know their position. If the true position can be established by other contractual means then the breakdown is likely to be immaterial. Provided always that the true position can be restored by the operation of other contractual machinery, for example reference to an adjudicator, arbitrator or the court to open up and review the decision or absence of a decision, the failure of the contract administrator during the course of the contract will not set time at large.45 (Pickavance, 2005).
2.6.1
Events Giving Rise to Time at Large
According to Pickavance (2005), in principle, there are at least three possibilities as to how time may have become “at large”:
45
Panamena Europea Navigacion (Compania Limitada) v Frederick Leyland & Co Ltd [1947] AC 428.
33 1. There may be a contract together with a number of employer’s risk events for which the contract makes provision to extend time but which cannot be applied because the draftsman has failed to specify the contract completion date or time for performance in the contract.
2. There may be a contract completion date together with a number of employer’s risk events for which the contract makes provision to extend time but which have either become inoperable or do not apply to the event causing the delay to completion so that, in the circumstances, the employer has in fact no power to extend time.46
3. There may not be a contract completion date simply because there was no contract.
The first two possibilities as to how time might have become at large require, as a starting point, the assessment of a reasonable period for the works for which the contractor has contracted and, while it is normally the case that the date for the completion is stipulated by the terms of the contract, its proper revision under the contract or by collateral agreement, that may not always be so.
Eggleston (1992) had the view that the circumstances of time becoming at large are usually where an act of prevention by the employer creates delay and that delay is not covered by an extension of time provision; and to a lesser extent:
1. Where the provisions for extension of time have not been properly administered or have been misapplied
2. Where there has been waiver of the original time requirements
3. Where there has been interference by the employer in the certifying process 46
See, for example, Gaymark Investments Pty Ltd v Walter Construction Group (1999) NTSC 143, (1999) 16 BCL 449; (2005) 21 Const LJ 70.
34 What is generally at stake in the matter of whether or not time is at large is the employer’s right to deduct liquidated damages for late completion. This right is lost completely if time becomes at large – the employer can still sue for general or unliquidated damages for late completion but regard will then be had to the contractor’s entitlement to a reasonable time.
Atkinson (2007) stated that the term “time at large” is usually used in construction contracts in the situation where liquidated damages are an issue. If time is “at large” then it is argued that liquidated damages cannot be applied, because there is no date fixed from which the liquidated damages can be calculated. In some situations the date for completion may be relevant to termination and the issue whether or not there has been a breach of contract by failure to complete. Time is made at large in four situations:
1. No time or date is fixed by the terms of the contract by which performance must take place or be completed.
2. The time for performance has been fixed under the contract, but has ceased to apply either by agreement or by an act of prevention (which includes instructed additional work) or breach of contract by the Employer with no corresponding entitlement to extension of time.
3. The Employer has waived the obligation to complete by the specified time or date. An alternative situation is that the Employer is faced with a breach of contract by the contractor which would entitle to Employer to terminate the employment of the contractor and/or to bring to an end the primary obligations of the parties to perform, but instead elects to continue with the performance of the contract.
4. The Employer has interfered in the certification process to prevent proper administration of the contract.
35 2.6.1.1 No Time or Date Fixed in the Contract
As mentioned, many construction contracts and standard forms of contract usually place an obligation on the contractor to complete the works by a specified completion date or within a specified period. If no date or period is fixed by the contract then the objective intention of the parties must be ascertained. In the case of a contract under the Supply of Goods and Services Act 1982, if the date is not fixed by a course of dealing between the parties, a term will be implied that the contractor’s obligation is to complete within a reasonable time (Section 14(1)). In J and J Fee Ltd v The Express Lift Company Ltd 47 there had been correspondence between the parties on the date of commencement and completion. The last correspondence from Express Lift stated that it could see little possibility of improvement on the dates previously given, but suggested that the situation be monitored and if it became possible to review the situation. It was held that as a matter of construction of its express terms Express Lift made a contractual offer of the completion date which it consistently offered before and that offer was accepted. The last letter was not written in plain “take it or leave it” terms but held out the possibility of bettering the completion date. Nonetheless there were dates for commencement and completion as express terms of the contract. His Honour Judge Peter Bowsher QC stated that if he was wrong on that issue, then there was a term implied that Express Lift would complete within a reasonable time. He gave a provisional view, without deciding, that based on the documents before him that it would be impossible for Express Lift to contend that a reasonable time for completion of the works would be any later than the date they had consistently put forward. (Atkinson, 2007).
47
[1993] 34 ConLR 147.
36 2.6.1.2 Time or Date Ceases to Apply by Acts of Prevention
The prevention principle comes from a generally stated legal principle that a party cannot benefit from its own wrong. The prevention principle has a very long history in the common law. As long ago as 1838 the court held in the case of Holme v Guppy 48 that where the contractor had been prevented from starting the works because of the activities of the employer's other workmen, a fresh contract could not be found and liquidated damages could not be applied (Brewer Consulting, 2005).
Eggleston (1992) also mentioned that the principle of prevention is of general application in contracts and is to the effect that one party cannot impose a contractual obligation on the other party where he has impeded the other in the performance of that obligation. In other words of Lord Justice Denning in Amalgamated Building Contractors Ltd v Waltham Holy Cross Urban District Council49, ‘the building owner cannot insist on a condition if it is his own fault that the condition has not been fulfilled’. “There is an implied contract by each party that he will not do anything to prevent the other party from performing a contract or to delay him in performing it. Generally such a term is by law imported into every contract.”50
An act of prevention may vary from an omission on the part of the employer, a fault, or even the ordering of variations and extras which might be fully contemplated by the contract. In SMK Cabinets v Hili Modern Electrics Pty Ltd51 Mr. Justice Brooking summarized the law as follows:
A wide variety of expressions have been used to describe the act of prevention which will excuse performance. At times the words are employed which suggest that any act or omission preventing performance will suffice: Dodd v Churton (1897), where all three 48
Supra note 3. [1952] 2All ER452 at 452 (CA). 50 Barque Quilpue Ltd v Bryant (1904), per Lord Justice Vaughan Williams. 51 [1984] VR 391; (1984) 1 Const LJ 159 at p. 396. 49
37 members of the Court speak of an act: Bruce v The Queen (1866), where the Court refers simply to prevention: Percy Bilton Ltd v Greater London Council (1982). Hudson Building and Engineering Contracts (10th ed.) p. 631 (acts or omissions) speaks of acts, whether authorized by or breaches of the contract but at p. 700 refers to wrongful acts. In Perini v Greater Vancouver Sewerage and Drainage District (1966) Bull J A with whose judgment Lord J A agreed, spoke of a wrongful act. The expressions used by Salmon L J and Phillimore L R in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) are “fault” and “fault or breach of contract”. Another phrase to be found is “act or default” in Amalgamated Building Contractors Ltd v Waltham Holy Cross Urban District Council (1952). Words used by Lord Denning (“his conduct – it may be quite legitimate conduct, such as ordering extra work”) appear in a passage cited with approval in the leading speech in the House of Lords: Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board (1973). I interpolate the observation that any formulation must accommodate the case of the ordering of extras, whether or not in the exercise of a power conferred by the contract. In the well know case of Roberts v Bury Improvement Commissioners (1870) two different statements appear. Blackburn and Mellor J J, say that no person can take advantage of the non-fulfillment of a condition the of which has been hindered by himself, while Kelly C B and Channell B would ask whether performance has been prevented by a wrongful act; both statements are cited by Lord Thankerton in delivering the principal speech in Panamena Europa Navigacion (Compania Limitada) v Frederick Leyland & Co Ltd (1947). It is worth noting the formulation of Davis J of the Supreme Court of Canada in Ottawa Northern and Western Railway Co v Dominion Bridge Co (1905).
38 The editors of Building Law Reports when commenting on the Court of Appeal decision in Percy Bilton v Greater London Council52 expressed the matter in more general terms:
“Act of Prevention” is not easy to define but historically it has come to mean virtually any event not expressly contemplated by the Contract and not within the Contractor’s sphere of responsibility. From the cases illustrated it may be seen that it is generally first necessary to determine whether there has been a breach of contract on the part of the employer or some other positive act or omission thereby preventing the contractor from completing the contract work by the due date and secondly, whether the contract did not make any express provision for extending time in such circumstances. The older cases were largely decided in relation to contract where little or no provision was made for extending the time for completion so as to keep alive the Contract Completion Date and thus preserve the right to liquidated damages. Contract nowadays generally contain extensions of time clauses drafted so as to cover the eventualities likely to constitute “acts of prevention” and are in many cases meticulous in their definition of the risks and responsibilities assumed by each party. It is submitted that in a modern contract such as the Standard Form of Building Contract the correct analysis of events which may delay completion should not be between “acts of prevention” and “other acts” but rather between matters for which the contractor in law assumes the risk and matters for which does not assume the risk. Such an approach is based upon the proposition that by undertaking to complete the work within the time stated a contractor assumes the responsibility of surmounting all risks other than those constituting breaches of contract or fault by the employer. It is sometimes useful to consider this apportionment of risk in terms of the “fault” of one party or the other, although “fault” is an emotive word.
52
[1982] 1 WLR 794.
39 An example of the prevention principle operating within the construction industry is where the contract provides a date for completion of the works but the employer, through its acts or omissions, prevents the contractor from achieving that date. Except to the extent that the contract provides otherwise, in such a situation the employer will no longer be entitled to demand completion by the contractual date, time becomes at large and the employer will not be entitled to claim liquidated and ascertained damages for the late completion.
According to Pickavance (2005), under most standard forms of contract, the employer is provided with the power to extend the time for completion in the event of the occurrence of one or more of the events listed as grounds of extension of time in the contract. However, in Rapid Building Group v Ealing Family Housing53 heard before the Court of Appeal in 1984 (involving a development under JCT 63) there was no applicable clause permitting the employer to grant an extension of time. In that case, owing to the presence of squatters, the employer was unable to give possession of site to the contractor on the due date. There is no provision in JCT 63 for extension of time for late possession.
The contractor was therefore able
successfully to argue that time was at large.
The contractor’s obligation was
therefore altered from one of completing by the contract completion date to one of completing within a reasonable time and the employer lost its right to levy liquidated damages. Therefore, in the event that, for reasons within the employer’s control, the contractor is prevented from completing by the contract completion date, the employer can no longer insist upon completion by that date and the contractor is then left without a firm date by which to complete. Time is then said to be “at large” as a result of the effect of what is known as the prevention principle as described earlier.
The application of the prevention principle is also famously illustrated by the case of Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd.54 This was an action by the contractor against a nominated subcontractor in which the contractor was employed the local authority (employer) for the erection of high-rise buildings 53 54
Supra note 4. (1970) 1 BLR 111.
40 for which the nominated subcontractor was required to carry out the piling. In the contract between the contractor and the employer, time was said to be “of the essence” without any provision for the contract period to be extended for acts or omissions of the employer that might interfere with the works. During the course of the works, serious faults were discovered in the piles and the work was suspended pending investigation and repair. However, because of delay on the employer’s part, an expert was not engaged until some six months later. His recommendations were eventually put into effect some ten months after the faults had first been discovered and the piling was not completed until 58 weeks after the work had been suspended. As a result of the subsequent delay to completion, the employer claimed liquidated damages from the contractor who, in turn, claimed the same liquidated damages from the nominated subcontractor.
The Court of Appeal found that, because part of the period of delay to completion had been caused by the employer itself and there was no clause in the contract between the contractor and the employer that enabled the employer to extend time for the effect of its own failures, there was then no date by which the contractor was obliged to complete and hence there was no enforceable completion date from which liquidated damages could be calculated. In explaining the application of the prevention principle in this case Salmon LJ said:
A clause giving the employer liquidated damages as so much a week or month which elapses between the date fixed for completion is usually coupled, as in the present case, with an extension of time clause…If the failure to complete on time is due to the failure of both the employer and the contractor, in my view, the clause does not bite. I cannot see how, in the ordinary cause, the employer can insist on compliance with the condition if it is partly his own fault that it cannot be fulfilled. If the employer wishes to recover liquidated damages for failure by the contractor to complete on time in spite of the fact that some of the delay is due to the employer’s fault or breach of contract, an extension of time clause should provide, expressly or by necessary
41 interference, for an extension on account of such fault or breach on the part of the employer.
In Wells v Army and Navy Cooperative Society55 the contractors undertook to complete a building contract within a year, unless the works were delayed by variations, sub-contractors, “or other causes beyond the contractor’s control”. The contract conditions provide that the decisions of the employer as to time extensions and the determination of delays were to be final. As it turned out, there was a delay in completion by one year. The employer granted a three-month extension in respect of that part of the delay which was attributable to sub-contractors. The contractors were able to show that the delays were also caused by late site possession, delay on the part of the employer in furnishing drawings and additional works. The court ruled that while the time extension provisions were able to deal with delays generated by sub-contractors, the expression “or other causes beyond the contractor’s control” did not extend to include the employer’s failure to afford timely site possession nor his failure to furnish drawings at the appropriate time. Consequently, the time extension provision could not be held to cover these acts of prevention and, hence, could not operate to retain the operability of the liquidated damages provision.
This decision was cited with approval by the Court of Appeal of British Columbia in Perini Pacific Ltd v Greater Vancouver Sewerage and Drainage Board (1966), where it was decided that an extension of time clause which provided for time to be extended on account of “extras or delays occasioned by strikes, lockouts, force majeure or other cause beyond the control of the contractor” similarly would not cover delays caused by the employer’s delivery of certain machinery in a defective condition. Again, no liquidated damages could be recovered, although it was forcefully argued on behalf of the employer that the effect of the employer’s act of prevention only accounted for 45 days out of the total delay of 99 days.
55
(1902) 86 LT 764.
42 The operation of prevention principle was also clearly demonstrated in the classic case of Dodd v Churton.56 In that case, a building contract permitted extra work to be ordered during the course of the contract.
There were the usual
provisions for the imposition of liquidated damages in the event of delay in completion, but there was no express provision to enable time to be extended. Additional work was ordered which had the effect of delaying completion. The employer attempted to impose liquidated damages on the period of delay after an allowance of a fortnight had been made for what he considered was the appropriate portion of the delay caused by the additional work.
The court ruled that the
employer was not entitled to claim any liquidated damages. The delay was attributed in part to his act of ordering additional work but there was no operative time extension provision in the contract which would have permitted for the completion time to be extended, thereby enabling the liquidated damages clause to be kept alive. In his judgment Lord Esher MR stated the position under common law as follows:
The principle is ... that, when one party to a contract is prevented from performing it by the act of the other, he is not liable in law for that default; and accordingly a well established rule has been established in cases of this kind ... to die effect that if the building owner has ordered extra work beyond that specified by the original contract which has necessarily increased the time requisite for finishing the work, he is thereby disentitled to claim the penalties for non-completion provided for by the contract. The reason for that rule is that otherwise a most unreasonable burden would be imposed on the contractor. 57
56
[1897] 1 QB 562 (CA). [1897] 1 QB 562, 566. See also Thornhill v Neats (1860) 8 CB (ns) 149; Russell v Viscount Sa da Bandeira (1862) 13 CB (NS) 149; Westwood v Secretary of State for India (1863) 7 LT 736; Murdoch v Lockie (1897) 15 NZLR 296; Meyer v Gilmer (1899) 18 NZLR 129; Cf Tew v Newbold-on Avon School Board (1884) 1 C&E 260; Trollope & Colls Ltd v NW Metropolitan Regional Hospital [1973] 1 WLR 601 (HL); Bilton v Greater London Council (1982) 20 BLR 1, HL; SMK Cabinets v Hili Modern Electrics [1984] VR 391 (Victoria Full Court). 57
43 2.6.1.3 Waiver
Pickavance (2005) asserted that apart from the circumstances in which there is no specified time, or in which, whilst there may be a specified time, there is no power to vary it, there is one other situation in which the contractor may not have a fixed date by which it must complete.
That is the circumstance in which the
employer has waived the obligation to complete by the specified time or date or, where the employer, faced with a breach of contract by the contractor which would entitle the employer to terminate the employment of the contractor and/or to bring to an end the primary obligations of the parties to perform, instead elects to continue with the performance of the contract.
For example, in Charles Rickards Ltd v
Oppenheim,58 the plaintiff agreed to supply a Rolls Royce motor car chassis and to build a body on it within seven months. It failed to complete the work by the agreed delivery date, but the defendant waived the original delivery date and new dates were promised and agreed. Eventually, the defendant gave written notice to the plaintiff stating that, unless he received the car by a firm date, four weeks away, he would not accept it. The car was not delivered within the time specified and was not completed until some months later when the defendant refused to accept it. The Court of Appeal held that he was justified in doing so. After waiving the initial stipulation as to time, the defendant was entitled to give reasonable notice making time of the essence again, and on the facts the notice was reasonable.
Where a new date is not stipulated, then performance must be achieved within a reasonable time, whatever that happens to be in the circumstances. So, for example, in the case of Astea (UK) Limited v Time Group Limited,59 Astea was a provider of software to Time Group, which was a manufacturer and retailer of personal computers. Astea had agreed to complete performance of its services by the end of October 2000 or by 6 November 2000 (the facts seemed unclear). The dates passed, no new completion date was set and, in March 2001, Time Group
58 59
[1950] 1 KB 616. [2003] EWHC 725 (TCC).
44 subsequently claimed the contract had been repudiated and terminated the contract.60 It was common ground that strict compliance with an agreement to complete by the end of October 2000 or by 6 November 2000 had been waived by failure to treat such failure as repudiatory and that Astea’s obligation thereafter was to complete within a reasonable time.
2.6.1.4 Failure of Contractual Machinery
According to Atkinson (2007), if the time or date for completion is effected by events which entitle the contractor to an extension of time, but the contractual machinery can no longer operate, then time is at large. The circumstances will be rare.
In Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium (No 2) [1998], BRL was awarded the contract for the construction of a new golf course on a reclaimed landfill site under an amended ICE 5th Edition. One issue was whether the contractual machinery had broken down and if so the effect. It was held that a breakdown of the contractual machinery occurs when, without material default or interference by a party to the contract, the machinery is not followed by the person appointed to administer and operate it and, as a result, its purpose is not achieved, and is either no longer capable of being achieved or is not likely to be achieved. His Honour Judge Humphrey Lloyd stated that this could for most practical purposes be equated to interference by a contracting party in the process whereby the other is deprived of a right or benefit. Examples were the failure of an employer to reappoint an administrator or certifier on the resignation of the previously appointed person or where that person fails or is unwilling to do his duty and the Employer will not take steps to rectify the position.
60
Reference was made to the decision in
It was not contended that it had been expressly agreed that Astea would do anything by a date proximate to March 2001, nor that any notice had been given making time of the essence of the contract in relation to Astea doing something by a date proximate to March 2001, it was just the date when Time Group’s patience expired.
45 Panamena Europea Navigacion v Frederick Leyland Ltd61. It was held that noncompliance with the machinery by the administrator was not in itself sufficient: the effect must be that either or both of the parties to the contract do not in consequence of the breakdown truly know their position or cannot or are unlikely to know it. If the true position is or can be established by other contractual means then the breakdown is likely to be immaterial even when the result of the breakdown is that one party does not obtain the contractual right or benefit which would or might otherwise have been established by the machinery, provided that the true position can be restored by the operation of other contractual machinery.
2.7
Conclusion
Colman J stated in the case of Balfour Beatty Building Ltd v Chestermount Properties Ltd62 that:
In the absence of an express provision, the consequence of the occurrence of an act of prevention (in this case the giving of a variation instruction after the most recently fixed completion date) was that the entire extension of time, completion date and liquidated and ascertained damages code was displaced by a general contractual duty to complete the works within what in all the circumstances was a reasonable time from the date of the act of prevention failing which the contractors would be liable for unliquidated damages for breach of contract in failing to complete within a reasonable time.
In the absence of any agreed contractual mechanism for fixing a new date for completion, no such new date can be fixed and the contractor’s duty then is to 61 62
[1947] AC 428. 62 Build LR 1.
46 complete the works within a reasonable time. Provided that a contractor has not acted unreasonably or negligently, he will complete within a reasonable time despite a protracted delay if the delay is due to causes outside his control.
In such
circumstances, time is said to be at large (Chappell, 2005). The question of time being at large and the relationship between the time for completion, liquidated damages and extension of time clause are concluded below:
1. The general rule is that the main contractor is bound to complete the work by the date for completion stated in the contract. If he fails to do so, he will be liable for liquidated damages to the employer.
2. That is subject to the exception that the employer is not entitled to liquidated damages if by his acts or omissions he has prevented the main contractor from completing his work by the completion date
3. These general rules may be amended by the express terms of the contract, such as extension of time clauses.
CHAPTER 3
REASONABLE TIME
3.1
Introduction
The Concise Oxford Dictionary (10th edition) by the Oxford University Press defines the word “reasonable” as fair and sensible, and as much as is appropriate or fair. In the nineteenth century and earlier, the courts imposed implied terms on the parties to all contracts of certain types, such as sale of goods and bills of exchange, by way of judicial legislation. Such implied terms have been consolidated by statute and, as Judge Peter Bowsher QC remarked in Barratt Southampton Ltd v Fairclough Building Ltd (1988):
These terms now have the status of standard terms of contract upon which everyone is deemed to contract unless express terms are agreed to the contrary.
There is little to be learned from them when
considering what terms should be implied into a modern commercial contract falling outside those old cases or the consolidating statutes into which they have been incorporated.
A straightforward instance of this type of term is to be found in the field of sale of goods. Where there is a contract for the sale of goods, the Sale of Goods Act
48 1979 implies various terms into the contract, for example that the goods will be reasonably fit for any purpose made known to the seller. A similar term will be implied in contracts for the supply of a service or contracts for work and materials by section 4 of the Supply of Goods and Services Act 1982. (Powell-Smith et al., 1999)
In Barque Quilpue Ltd v Brown [1904] 2 KB 264, Vaughan Williams LJ said:
“... in this contract, as in every other, there is an implied contract by each party that he will not do anything to prevent the other party from performing the contract or to delay him in performing it. I agree that generally such a term is by law imported into every contract, in the same way as you import into every contract a stipulation that the various things which are to be done by the one party or the other are, if no time is specified, to be done within a reasonable time. In each of these cases that may be called an implied contract.”
Where the construction contract does not expressly prescribe the time within which the works are to be completed, the court may be prepared to infer that the parties intended the works to be completed within a reasonable time.63 However, before the court arrives at this inference, it must consider the contract as a whole and the circumstances surrounding it. Where a completion date is clearly specified in the contract, the contractor is expected to complete the works by the “due date”.64 In such a situation, a contractor cannot maintain that he is entitled to complete the works within a reasonable period after the date fixed65 (Chow, 2004).
The principles of reasonable time apply not only to contracts where time for completion has not been specified in the first place, but also to contracts where specified time has been lost and reasonable time substituted. Contracts whereby time 63
See: Charnock v Liverpool Corporation [1968] 1 WLR 1498 (CA). See: Greater London Corporation v Cleveland Bridge and Engineering (1984) 34 BLR 57. 65 See: Raineri v Miles [1981] AC 1050 (HL), cf Amherst v James Walker [1983] Ch 305 at 315 (CA). 64
49 for completion is not specified are very common in construction and may indeed form the majority. This is because when the average householder employs a builder to fit new windows, erect a porch or decorate the bedrooms, he pays most attention to the price and the written quotation but beyond that the contractual details are frequently left open. Where there is a formal contract and time is at large the defunct extension of time provisions may serve well as some guide as to what is reasonable time. Thus, extra works, exceptional weather, strikes etc., might all be taken into account. With or without a formal contract it might be appropriate to look at the production capability of the contractor, his management and financial resources, and his other contractual commitments, particularly if known to both parties (Eggleston, 1992).
3.2
Reasonable Time
It has been seen that an obligation to complete within a reasonable time sounding in damages arises either because the contract is silent as to time, or because the specified time has ceased to be applicable by reason of some matter for which the employer is responsible. It remains to consider what is a reasonable time (Wallace, 1995).
According to Davies (1989), at the turn of the century the general rule of law as it then stood was that any act necessary to be done by either party in order to carry out a contract must be done within a reasonable time. The principle was interpreted that except where time was of the essence of the stipulation, a breach of contract was only committed in the case of unreasonable delay in the performance of any act agreed to be done. For example, where time was not essential, a party failing to complete a sale of land on the day fixed by the agreement did not commit a breach of contract either in equity or at law; it was only on failure to complete within a reasonable time after that day that the contract was broken.
50 However, by the middle of the century it was found that whether or not time was of the essence, anyone who was actually injured by the breach of a time stipulation could recover damages.
In other words, a breach of a contractual
stipulation as to time which is not of the essence of a contract would not be treated as a breach of a condition precedent to the contract, that is as a breach which would entitle the innocent party to treat the contract as terminated or which would prevent the defaulting party from suing the specific performance. Nevertheless, it was a breach of the contract and entitled the injured party to damages if he had suffered damage.
The current view of the law with regard to time within all contracts may be summarized as follows. Time will not be considered to be of the essence unless:
1. The parties expressly stipulate that conditions as to time must be strictly complied with
2. The nature of the subject matter of the contract or the surrounding circumstances show that time should be considered to be of the essence
3. A party that has been subjected to unreasonable delay gives notice to the party in default making time of the essence
In mercantile contracts, that is contracts which deal with commercial matters, building contracts being analogous to them, time will be considered of the essence out of practical necessity. Time is of the essence in building contracts because, for example, the landowner has some use for the building on a specific date.
What then is the effect of the term ‘reasonable time’? According to Davies (1989), what is a reasonable time may not depend solely upon the convenience and financial interests of the contractors. No doubt, it is in their interest to have every detail ‘cut and dried’ on the day a contract is signed, but a contract may not
51 contemplate that. Rather, it may contemplate further drawings and details being provided.
The architect or engineer is to have time to provide them which is
reasonable having regard to the point of view of him and his staff and the point of view of the client as well, as the point of view of the contractor.
Where the time for completion is not given in the contract documents, the Supply of Goods and Services Act 1982, Part 2, section 14(1), provides for a term to be implied that the work will be carried out within a reasonable time. However, if parties to a contract were told by the client the contract completion date because it had been left out of the contract documents, such evidence may not be admitted, particularly where to put in the date would lead to a severe liquidated damages clause being brought into operation.
In other words, as a general principle, where a
complete blank is left in a material part of the contract evidence is not admissible to fill it.
According to Wallace (1995), it has been seen that an obligation to complete within a reasonable time sounding in damages arises either because the contract is silent as to time, or because the specified time has ceased to be applicable by reason of some matter for which the owner is responsible. It remains to consider what a reasonable time is. Reasonable time is primarily a question of fact and must depend on all the circumstances which might be expected to affect the progress of the works. There are few, if any reported cases in England directly involving a typical building or engineering contract, but it is suggested that certain questions require to be answered before a reasonable time can be properly assessed.
Wallace (1995) further elaborated that in the first place, when arriving at a reasonable time in “ordinary circumstances”, the parties may or may not have contracted with the particular resources and capacity of the particular builder in mind. Thus, an owner may have deliberately chosen a small local or jobbing builder, with limited resources of capital, plant and labour, to build his house, in the hope of getting a cheaper or better quality job while sacrificing speedy completion. On the
52 other hand, a builder with limited resources might tender for a large contract in competition with more substantial contractors and give no indication of his inability to carry out the work as rapidly as them. In the former case the test might well be subjective, and in the latter objective. 66 A party may have expressly or impliedly warranted or discounted his ability or capacity to maintain progress in a particular situation or at a particular speed.
While it may be that most factors beyond the builder’s control will excuse him, it is possible that expressly or impliedly the parties will have contracted with a particular factor in mind. Thus, whereas there is little doubt that allowance would be made for delay due to an unexpected strike, it would not, it is suggested, follow that a contractor’s inability to obtain sufficient labour in competition with other contractors in the district would excuse him. In the case of subcontractors of all kinds, whether nominated or otherwise, it is submitted that the tendency of the courts should be not to excuse the main contractor from meeting his main contract obligation in any case where delay is caused by some act or omission within the subcontractor’s control, though for that reason outside the main contractor’s direct personal control, since, in such a case, the contractor will or should have his remedy against the subcontractor, who in law is the contractor’s agent for the purpose of carrying out the works, whether nominated or not. Any tendency to excuse the main contractor would in effect be an invitation to subcontractors to default on their obligations, and might well result in the owner failing to recover his own loss whereas the contractor might still be able to recover any loss he personally might have suffered at the hands of the subcontractor. Again, it may be a question whether the parties contracted with a builder’s other commitments in mind. In approaching this question, it should be borne in mind that with the increasing degree of specialist and sub-contracted work in the building industry, the direct responsibilities of the main contractor have become correspondingly limited to the provision of a site-organisation, a nonspecialised labour force, and materials and plant, so that in most cases the builder, by entering into the contract, is, in effect, warranting that he has or will have at least these available in sufficient quantity for due performance of his obligations. All
66
See Hydraulic Engineering Co Ltd v McHaffie, Goslett & Co. (1878) 4 QBD 670.
53 these are matters which will, no doubt, be taken into consideration when making the initial “ordinary circumstances” assessment, before considering the actual postcontract circumstances (Wallace, 1995).
According to Chow (2004), the test of “reasonableness” is sometimes construed as being synonymous with the convenience and economic interest of the contractor.
In Neodox Ltd v Swinton and Pendlebury Borough Council67 the
contractor alleged that there was an implied obligation on the part of the employer to provide all necessary instructions and details “in sufficient time to enable the contractor to execute and complete the works in an expeditious and economic manner and/or in sufficient time to prevent the contractor being delayed in such execution and completion”. Diplock J ruled that what was a reasonable time did not depend solely on the convenience and financial interests of the contractor.
He
observed that while it may appear to the contractor that it is in his interest “to have every detail cut and dried on the day the contract is signed”, such a state of affairs could not have been contemplated at the time of the contract. He then proceeded to hold that what was a reasonable time was a question of fact to be determined with reference to all the circumstances of the case. These include:
1. Considerations of the employer’s engineer and his staff 2. The order by which the works were to be carried out and approved by the engineer 3. The contractor’s requests for particular details 4. Whether the details requested relate to variations 5. The length of the contract period
Admittedly, the list of factors tendered by Diplock J in his judgment cannot, on any stretch of imagination, be considered to be exhaustive. However, it does serve to indicate the wide range of factors which have to be considered when determining the question of “reasonableness” with respect to the timing of instructions, additional drawings and information.
67
(1958) 5 BLR 34.
54 In calculation of reasonable time, Gill (1969) stated that all the circumstances of the case should be taken into consideration, such as the nature of the works to be done, the time necessary to do the work, the ability of the contractor to perform68, the proper use of customary appliances69, and the time which a reasonably diligent producer of the same class as the contractor would take.70
3.3
Statutory Provisions that Apply the Term “Reasonable Time”
3.3.1
Sale of Goods Act 1957 (Revised 1989)
According to Vohrah and Wu (2003), the statute applicable to sale of goods in Peninsular Malaysia is the Sale of Goods Act 1957 (Revised 1989). There is no equivalent statute for the states of Sabah and Sarawak and the law in these two states is governed by section 5(2) of the Civil Law Act 1956 which provides, among others, that ‘the law to be administered shall be the same as would be administered in England in the like case at the corresponding period’. Consequently, these two states are bound by statute to continue to apply principles of English law relating to the sale of goods. The model of the local Sale of Goods Act (SGA) was the English Sale of Goods Act of 1893 which is re-enacted almost in its entirety with some minor modifications such as the numbering of the provisions.
Chapter IV of the SGA deals with the performance of the terms of the contract, including the delivery of goods. Where under the contract of sale, the seller is bound to send the goods to the buyer but no time for sending them is fixed, the seller is bound to send them within a reasonable time (36(2)). Demand or tender of
68
Attwood v Emery (1856), 1 CB (NS) 110; 26 LJCP 73. Lyle Shipping Co. v Cardiff Corporation [1900] 2 QB 638. 70 Supra note 66. 69
55 delivery may be treated as ineffectual unless made at a reasonable hour. What is a reasonable hour is a question of fact (36(4)). Assuming that a seller is bound to make delivery under the contract and he requests the buyer to take delivery, and the buyer does not respond within a reasonable time after such request. The buyer is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and to pay a reasonable charge for the care and custody of the goods. This does not affect the seller’s right for damages under the contract where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract (s.44). Where delivery is delayed through the fault of either seller or buyer, the goods are at risk of the party at fault as regards any loss which might not have occurred but for such fault (s.26).
3.3.2
Supply of Goods and Services Act 1982 (UK)
In Singapore, Malacca, Penang, Sabah and Sarawak, the (UK) Supply of Goods and Services Act 1982 is applicable and gives statutory status to rule that largely existed in common law, mirroring the Sale of Goods Acts (in Singapore, except for Part II).
The 1982 Act extends the general philosophy of implied
warranties as to standard of performance to contracts for services and to the transfer of goods under other contractual arrangements such as building contracts. Section 14 of the Act mentioned that where the time for performance has not been fixed, a term is implied for performance ‘within a reasonable time’. What is a reasonable time is stated in section 14(2) to be a question of fact (Robinson et al., 1996).
56 3.3.3
International Sales
Two international conventions referred to as the Hague Conventions 1964 governs contracts for the sale of goods between parties residing in different countries.
The United Nations Commission on International Trade Law
(UNCITRAL) has drafted a convention to replace the Hague Conventions and it adopted at a conference in Vienna in 1980 as the Convention on Contracts for the International Sale of Goods.
It comes into operation only when the necessary
number of ratifications has been received (Vohrah and Wu, 2003).
Andersen (1998) presented a paper that focused on the meaning of the term "reasonable time" as understood by Article 39(1) of the 1980 United Nations Convention on Contracts for the International Sale of Goods (referred to as the CISG or the Convention). This provision provides that a buyer notify the seller “within reasonable time” after he discovers or ought to have discovered that the goods do not conform to the contract. The objectivity of a term is especially important where the CISG is concerned, as this is a uniform law which must be interpreted and practised uniformly. The aim of the determination of "reasonable time" in Article 39(1) will be to establish a pattern to the application of the provision, and assess whether the term is an autonomous term applied uniformly.
Article 38 prescribes a duty for the buyer to inspect the goods delivered to him within a short period.
Since Article 39(1) relies not only on the time of
discovery of non-conformity but also on the time a buyer “ought to have discovered it”, these two provisions are closely entwined. Indeed, Article 38 is prefatory to Article 39. This relationship with Article 38 usually determines precisely from when the reasonable time period is to be measured: as the time-frame of reasonable time pertains to the period after the non-conformity is discovered (or ought to have been discovered), it is only related to the time of delivery via Article 38. The Article 38 examination need not be carried out immediately after the delivery of the goods
57 (although this is recommendable to avoid all doubts) nor within a set time-frame, but hurriedly according to the objective circumstances of the case.
While the purpose of the provision would seem to imply that the time-frame should be reasonable for the seller whose interests it protects, the fact that it represents a flexible compromise in the interests of the buyer would outweigh this consideration.
By taking “a wide range of factors” into account, and thus the
reasonableness of the time-frame in both the seller's and the buyer's point of view, a more subjective and fair solution can be reached in each individual case. But when applying this interpretation to a particular case, the practitioner should be aware that a wide range of factors does not mean all factors. Not all factors are suitable for influencing the time-frame in question. The influence of some aspects must be considered legal misapprehensions in international trade rather than factors of reasonableness. For instance, what if these factors include purely domestic aspects? Many determinations of reasonable time glean their identity from the international practice of Courts and Tribunals when determining “reasonable time” and it is certainly here that the key is to be found. It is the actual application of the provision which ultimately defines it.
3.4
Conclusion
The word “reasonable time” is found in, among others, Supply of Goods and Services Act 1982, Sales of Goods Act 1957, United Nations Convention on Contracts for the International Sale of Goods and Landlord and Tenant Act 1988. This term is also found in construction contracts, contracts of sale and purchase of land and charterparty.
58 According to the Law Dictionary, reasonable time is a subjective standard based on the facts and circumstances within a particular case, with applicability in a variety of contexts. Within commercial law, the term applies to the amount of time in which to accept an offer, to inspect goods prior to payment or acceptance, to await performance by a party who repudiates a contract or the time in which a seller may substitute conforming goods for goods rejected by a buyer as non-conforming. If not governed by statute, the term may also refer to the time allowed to set aside a default judgment, to inform an insurance company of an accident, to file certain claims, and to make various motions. Despite its subjectivity, it can be seen that this term is widely used and should therefore be studied in depth.
CHAPTER 4
REASONABLE TIME WHEN TIME IS AT LARGE
4.1
Introduction
The preceding chapter elaborated on reasonable time and as Gill (1969) puts it, in a building contract to perform a work where no particular time is specified within which the work is to be completed, an agreement to complete within a reasonable time will be implied and a reasonable time for completion will be allowed.68 The question as to what is a reasonable time is one of fact69 and will be addressed in the discussion below.
Hence, this chapter will identify and determine the meaning of “reasonable time” when time is at large. Those meanings are based on decided court cases, which mainly were held under England law and laws in other Commonwealth countries.
68 69
Startup v Macdonald (1843), 6 Man. & G. 593, per Rolfe, B. Fisher v Ford (1840), 12 Ad. & El. 654, per Lord Denman, C. J.
60 A total number of ten cases centered on what is a reasonable time were studied, three of them were involving construction, two involving shipping, two on carriage of goods through railway and the remaining were contracts of sales of goods, and supply of goods and services.
4.2
Reasonable Time when Time is at Large
As have been reviewed, time at large occurs when no time of completion is specified in the contract/where the contract is silent as to time and where the stipulated date has ceased to be applicable by reason of prevention or breach. The obligation is then to complete the works within a reasonable time.
Therefore,
through the analysis of courts’ judgments, the meaning as to “reasonable time” can be divided to reasonable time where no time for completion is specified in the contract and reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach.
4.2.1
Reasonable Time Where No Time for Completion is specified in the Contract/Contract is Silent as to Time
Six of the ten cases are cases whereby the time for completion is not stipulated in the contract. These cases are discussed in detail to give a background of the cases and then what the judges say about reasonable time in such cases. One well-known case is Pantland Hick v Raymond & Reid70. In this case, a consignee, upon whom rested the contractual obligation to unload the appellant’s vessel, and
70
[1893] AC 22.
61 where no time for discharge was stipulated, argued that it had discharged a vessel within a reasonable time having regard to the fact that there had been a single cause of delay, being a strike of dock workers over which the consignee had no control and which prevented performance of the contract.
The appellant contended that the test is what time would have been required for the discharge of the vessel in ordinary circumstances, and to the extent that the respondents had to provide labour, they must be responsible if the discharge is delayed this point. The respondents argued that the test to be applied is what was reasonable under existing circumstances assuming that, in so far as the circumstances were extraordinary, they were not due to any act or default on the part of the respondents.
Lord Herschell LC stated:
The only sound principle is that the ‘reasonable time’ should depend on the circumstances which actually exist. If the cargo has been taken with all reasonable dispatch under those circumstances I think the obligation of the consignee has been fulfilled. When I say the circumstances that actually exist, I, of course, imply that in those circumstances, in so far as they involve delay, have not been caused or contributed to by the consignee.
In the same case Lord Watson said:
When the language of a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. The rule is of general application, and is not confined to contracts for the carriage of goods by sea. In the case of other contracts the condition of reasonable time has been frequently
62 interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, not withstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably.
A common carrier of goods is not, in the absence of a special contract, bound to carry within any given time, but only within a time which is reasonable, looking at all the circumstances of the case; and he is not responsible for the consequences of delay arising from causes beyond his control. The defendants, a railway company, were prevented, by an unavoidable obstruction on their line, from carrying the plaintiff's goods within the usual (a reasonable) time. The obstruction was caused by an accident resulting solely from the negligence of another company who had, under an agreement with the defendants, sanctioned by act of parliament, running powers over their line. It was held in this case of Taylor v The Great Northern Railway Company71 that the defendants were not liable to the plaintiff for damage to his goods caused by the delay.
In the case of The Lyle Shipping Company Ltd v The Corporation of Cardiff72, by a charter a cargo was to be “discharged with all reasonable dispatch as customary”.
The custom at the port was to discharge into the railway wagons.
Without any negligence on the part of the charterers, but owing to the stress of work, and a consequent deficiency in the number of wagons available, the ship was delayed. It was held by the Court of Appeal, that the charterers, having done their best to procure the appliances that were customarily used for discharging such a ship, and having used them with proper dispatch, were not liable for delay.
Smith LJ stated:
Now, the contract which the plaintiffs have in this case with the defendants for the discharge of the cargo, as will be seen from the 71 72
[LR] 1 CP 385. [1900] 2 QB 638.
63 latest authority upon the subject in the House of Lords - no fixed time being stipulated for the discharge - is that the plaintiffs will discharge the cargo within a reasonable time under existing circumstances, or, in other words, with all due diligence having regard to all the existing circumstances, and, in my opinion, there is no limit as to what are existing circumstances, as argued by the plaintiff - namely, the limit of the user of the port appliances. The case to which I allude is that of Hick v. Raymond in the House of Lords, and when what is therein laid down is understood it will be seen that the defendants' contract is what I have said it is.
In the case of Sims & Co. v Midland Railway Co.73, perishable goods were consigned by the defendants' railway for delivery to the plaintiffs, no time being specified within which the goods were to be delivered. During the transit a general strike of railway servants, including the defendants' servants, broke out, and the defendants were unable to forward the goods to their destination. There was no evidence that the strike was caused or contributed to by the defendants. The goods becoming deteriorated the defendants sold them. In an action to recover damages for breach of contract, to deliver the goods, it was held that in calculating what was a reasonable time for delivery in accordance with the principle laid down in Hick v Raymond & Reid 74, the strike of the defendants' servants must be taken into consideration as one of the circumstances existing at the time of the carriage, and that therefore the defendants were not liable for the delay.
In the course of his judgment Ridley, J., having cited the passages from Lord Herschell's judgment in Hick v. Raymond & Reid:
It is not right to say that, because a strike of the servants of the defendants, who are under a duty to deliver the goods, causes the delay, it follows that the cause of delay is one within the defendants' 73 74
[1913] 1 KB 103. Supra note 70.
64 control, and that they are liable for it. I can imagine a case in which it might be said that the happening of the strike was within the control of the railway company; but there ought to be evidence of it. Apart from such evidence the mere fact that there was a strike among the railway company's servants causing the delay would not make the company liable; but the strike would be an existing circumstance in the ascertainment of a reasonable time. I do not say how the matter would have stood if there had been evidence that the strike was brought about by some unreasonable demand on the part of the railway company. There was no such evidence.
In British Steel Corporation v Cleveland Bridge & Engineering Co Ltd75 the defendants successfully tendered for the fabrication of steel work in the construction of a building. The design required steel beams to be joined to a steel frame by means of steel nodes.
The plaintiffs, who were iron and steel manufacturers, were
approached by the defendants to produce a variety of cast-steel nodes for the project. Two main areas of dispute developed between the parties. First, was there any binding contract between the parties at all, under which the nodes were delivered? Cleveland Bridge & Engineering (CBE) contended that there was such a contract, which was to be found in certain documents (including a letter of intent issued by CBE) and the conduct of British Steel Corporation (BSC) in proceeding with the manufacture of the nodes. BSC's primary contention was that no binding contract was ever entered into, and that they were entitled to be paid a reasonable sum for the nodes on a quantum meruit, a claim sounding not in contract but in quasi contract. The motives of the parties in putting their cases in these different ways lay primarily in the fact that, unless there was a binding contract between the parties there was no legal basis for CBE's counterclaim for damages in respect of late delivery or delivery out of sequence. So far as delivery was concerned, CBE's submission was that BSC's obligations, under the contract alleged by them to have come into existence, was to deliver the goods in the requested sequence and within a reasonable time.
75
[1984] 1 All ER 504, 24 Build LR 94.
65 The first issue is concerned therefore with an analysis of the legal relationship between the parties.
The second issue is whether, if CBE are right in their
submission that there was a binding contract as alleged by them, BSC were in breach of that contract in delivering the goods late and out of sequence. This latter issue is concerned primarily with consideration of the various events and difficulties which occurred in production of the nodes by BSC, and deciding whether, in the light of these events, BSC failed to deliver the goods within a reasonable time as alleged by CBE.
It was held that the parties had ultimately been unable to reach final agreement on the price or other essential terms, thus, the contract was eventually not entered into and therefore the work performed in anticipation of it was not referable to any contractual terms as to payment or performance. On the question of delivery within a reasonable time, Goff J stated that:
The question of what constituted a reasonable time had to be considered in relation to the circumstances which existed at the time when the contractual services were performed, but excluding circumstances which were under the control of the party performing those services. As I understand it, I have first to consider what would, in ordinary circumstances, be a reasonable time for the performance of the relevant services and I have then to consider to what extent the time for performance by BSC was in fact extended by extraordinary circumstances outside their control.
His Lordship then considered the evidence and concluded that a reasonable period for the manufacture of the 137 nodes, which were at the request of CBE, was 55 weeks and that since such a period would have gone well beyond 11 April 1980 when the last node was in fact delivered it followed that if, contrary to his Lordship's previously expressed opinion, BSC had been bound to complete the work within a reasonable time they would not have been in breach of that obligation. (All but one
66 of the nodes had been delivered, delivery of the remaining node being held up until 11 April 1980 due to an industrial dispute at the plaintiffs' plant.)
The case of Astea (UK) Limited v Time Group Limited76 warns of the dangers of entering into a contract without setting express deadlines for completion - in particular when attempting to rely on the law which says that performance must be carried out “within a reasonable time”. In July 2000, Astea entered into a contract with Time Group, a computer retailer, to supply Time with software for its customer call centre. Owing to delays on both sides, the integration and testing of the new software was delayed and Time withheld payment to Astea on the basis that it was in breach of section 14(1) of the Supply of Goods and Services Act 1982 because it had not performed the software contract within “a reasonable time” and had repudiated the contract by failing to complete the work by 6 March 2001. Time argued that “reasonable time” meant that Astea had to complete the services as fast as was humanly or technically possible, subject only to delays that it could not control. However, the Technology and Construction Court ruled there was no express term to complete the work by 6 March 2001 and the implied term under s14(1) of the Services Act applied.
Therefore Astea had not exceeded a reasonable time for
performance and Time was ordered to pay. In order for Time's argument to have some credibility, it needed to issue Astea with a written notice setting out a new deadline for performance and making "time of the essence", which it did not do. Both counsel for the defendant and plaintiff endeavoured to seek support for their respective emphases from the well-known decision of the House of Lords in Pantland Hick v. Raymond & Reid77.
From the six cases discussed above, the considerations of what is a reasonable time are given below:
-
76 77
A reasonable time looking at all the circumstances of the case.
Supra note 59. Supra note 70.
67
-
Reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him.
- The condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, not withstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably.
- Perform with all due diligence having regard to all the existing circumstances, and there is no limit as to what are existing circumstances.
- What constitutes a reasonable time has to be considered in relation to circumstances which existed at the time when the contract obligations are performed, but excluding circumstances which were under the control of the contractor.
What in ordinary circumstances was a reasonable time for
performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control.
- Consideration of a reasonable time for performance is likely to include taking into account any estimate given by the performing party of how long it would take him to perform.
- The focus of attention in considering reasonable time is likely to be upon the allocation of resources to performance of the relevant contractual obligations.
A common consideration as to what constitutes a reasonable time in all the cases stated is a reasonable time looking at all the circumstances of the case. Lord Ashbourne said in the case of Pantland Hick v. Raymond & Reid 78:
78
Supra note 70.
68 What is the meaning of this expression “reasonable time”? It is obvious that “reasonable” cannot mean a definite and fixed time. It would not be “reasonable” if it was not sufficiently elastic to allow the consideration of circumstances, which all reason would require to be taken into account. The appellant accordingly admits that the consignee has a right to have all ordinary circumstances taken into account, but insists that all extraordinary circumstances are to be excluded from consideration. Is this distinction sound, and does it rest upon any real principle? If the consignee does all he can, is not his conduct reasonable? If by circumstances absolutely outside his control he can do nothing, is his inaction unreasonable? If it is reasonable to consider some circumstances outside his control in favour of the consignee, why are not all circumstances in the events which actually happen, and which he cannot control, also to be taken into account? In considering how to ascertain “reasonable time”, must not the question come in, whether the consignee in the circumstances which eventuated acted unreasonably? If throughout the consignee acted reasonably, if he did all he could, if he omitted nothing that he should have done, why should all the circumstances be arbitrarily divided into ordinary and extraordinary for the purpose of putting a narrow and artificial meaning upon the words “reasonable time”?
4.2.2
Reasonable Time where the Stipulated Date has ceased to be Applicable by Reason of Prevention or Breach
The remaining four cases are cases whereby the stipulated date for completion in the contract has ceased to be applicable by reason of acts of prevention or breach. Where, as a condition of its performance, time is of the essence of a contract for the sale of goods and, on the lapse of the stipulated time, the buyer continues to press for delivery, thus waiving his right to cancel the contract, he has a right to give notice
69 fixing a reasonable time for delivery, thus making time again of the essence of the contract, which, if not fulfilled by the new time stipulated, he will then have the right to cancel. The reasonableness of the time fixed by the notice must be judged as at the date when it is given. In similar circumstances, in the case of a contract for work and labour done, the person who has ordered the work can give a valid notice to the contractor making, time again of the essence of a contract. A reasonable time meant, in accordance with well-known authorities, a reasonable time in the circumstances as they actually existed, that is, that the plaintiffs would not exceed a reasonable time if they were prevented from delivering by causes outside their control, such as strikes or the impossibility of getting parts, and events of that kind; and that on the evidence in this case it could not be said that a reasonable time was in that sense exceeded.79
Reasonable time has to be considered in the light of the circumstances which prevailed after the contract. One has to consider what is the reasonable time provided for. There were two things that the buyers had to do in this case. First, they had to provide some sterling. They might have made an arrangement that they were merely to pay in sterling. In that case they would merely have had to provide themselves with the foreign currency; but they made an arrangement that they were to pay by letter of credit. So that they had two things to do, the letter of credit being in sterling: they had to get the sterling and they had to arrange for a letter of credit. The sterling is the currency in which they are buying and that is what they had first to provide. What the time provided for, the few weeks or the reasonable time, was for the machinery of getting the letter of credit. It was not provided for, or intended to be used for, obtaining the sterling.80
In CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors81 it was stated that in order to establish a time at large argument, it requires two-stages, that are establishing that there was an act of prevention by the Respondent which caused delay and that the delay is not covered by the extension of time provision. The
79
Rickards v Oppenheim [1950] 1 KB 616 Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd [1955] 1 Lloyd’s Rep. 303 81 [2001] HKCU 916. 80
70 Respondent has admitted it was in breach of Contract in delaying of payment of the Interim Certificates (Nos. 12 to 17). The Claimant says that Clause 23 of the Contract does not cover such default by the Employer.
In this time at large issue, it was found that the Claimant was delayed by the Respondent’s lack of payment as they depended very heavily on these interim payments. There were admitted late payments running into millions of dollars. An act of prevention by the Respondent sets time at large and that the Respondent is not entitled to deduct liquidated damages and it now has a reasonable period in which to finish the Works. A reasonable time for the completion of the Works is calculated. In calculating this time, the Claimant is entitled to rely on the effects of non-payment and late payment of interim payments.
In the case of Shawton Engineering Ltd v DGP International Ltd
82
, the
appellant, Shawton Engineering Ltd, was the sub-contractor to a joint venture, KAT Nuclear for the design and manufacture of a number of packages as part of the construction of premises and process plant at Sellafield for handling nuclear waste. The appellant sub-contracted the design work of five of these packages (numbered S468, S469, S511, S512 and S514) to the respondent, DGP International Ltd. The sub-contract for each package originally had a fixed completion date. In the event, in one of the contracts, there were variations instructed before and after the original completion date. On the other four contracts, the variations were all instructed after the original completion dates. By October 2000, the respondent was being asked to explain the reason for the delay. By letter dated 7 November 2000, the appellant said that it had to insist that within seven days the respondent provide it with an acceptable timeframe for completion of all contract works. Eventually, the respondent had not completed its work on any of the packages and the appellant terminated or purported to terminate the contracts. The appellant claimed against the respondent for breach of contract. There was no contractual mechanism for extending time on account of the variations. The parties agreed and HHJ Gilliland QC accepted that the effect of the
82
[2005] EWCA Civ 1359.
71 variations was that the respondent became obliged to complete its work within a reasonable time.
It was held that what was a reasonable time had to be judged as at the time when the question arose in the light of all relevant circumstances.
One such
circumstance was that the respondent had originally agreed fixed time periods (although upon a misapprehension as to the work content); another was the true work content. These worked in opposite directions. The mere instruction of a variation after the original date for completion would not by itself necessarily mean that a reasonable time had to be assessed afresh by reference only to the variation and whatever work happened to remain at the date of the variation (which is what the judge appeared to say); it was possible that a modest variation instruction given after an original completion date had passed could, depending on all the circumstances, result in an obligation to complete by a date in the past. However, the question was a composite one, and the circumstances here included that the variations were significant in scope and that the appellant was not insisting on, nor particularly concerned about, early completion of the respondent's work. The original completion dates and periods had cased to be of any relevance. This overlaid to extinction any question of calculating time periods by reference to the original dates for completion and the work content of variations. The judge was right to hold that the appellant had not established what was a reasonable time for completion; and that, on 7 November 2000, the reasonable time for completion was to be assessed afresh, mainly with reference to the outstanding work content including variations. Therefore, the respondent was not in breach for delay on 7 November 2000 and the appeal failed.
From the four cases discussed above, the considerations of what is a reasonable time are given below:
-
A reasonable time meant, a reasonable time in the circumstances as they actually existed
72 -
Effects of acts of prevention by Employer can be considered in calculating a reasonable time for completion
-
The fact that the experts had agreed what was an appropriate extension of time together with the originally agreed period was a fair indication of what should be regarded as a reasonable time for completion of the work, but that is in effect to treat the originally agreed period as being a reasonable period
The following tables (Table 4.1 and Table 4.2) summarize all the cases discussed above and give a clearer view on the explanation and meaning of “reasonable time” for each case and as well as the type of contracts involved.
73
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time
No
Cases
Explanation and Meaning of “Reasonable Time”
1
Taylor v The Great Northern Railway Company [LR] 1 CP 385 -
Reasonable time means a reasonable time looking at all the circumstances of the case. Circumstance in the case: carrying goods on the railway company’s line within the usual (a reasonable) time was unavoidably obstructed.
2
Pantland Hick v Raymond & Reid [1893] AC 22
Lord Watson said that when the language of a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. The rule is of general application, and is not confined to contracts for the carriage of goods by sea. In the case of other contracts the condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, not withstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably. Within a time which is reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him. Circumstance in the case: unloading of cargo was interrupted by a strike of the dock labourers which delayed the discharge.
-
-
Type of Contract/ Contractual Relationship Carriage of goods/ Owner of Goods and Railway Company Shipping/ Shipowner and Consignee
74
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
3
The Lyle Shipping Company Ltd v The Corporation of Cardiff [1900] 2 QB 638
-
No fixed time being stipulated for the discharge - is that the plaintiffs will discharge the cargo within a reasonable time under existing circumstances, or, in other words, with all due diligence having regard to all the existing circumstances, and there is no limit as to what are existing circumstances - namely, the limit of the user of the port appliances.
4
Sims & Co. v Midland Railway Co. [1913] 1 KB 103
-
Reasonable time under the existing circumstances Circumstance in the case: a general strike of railway servants, including the defendants' servants, broke out, and the defendants were unable to forward the goods to their destination.
Type of Contract/ Contractual Relationship Shipping/ Shipowner and Charterer
Carriage of goods/ Purchaser of goods and Railway Company
75
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
5
British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504, 24 Build LR 94.
6
Astea (UK) Limited v Time Group Limited [2003] EWHC 725 (TCC)
- What constitutes a reasonable time has to be considered in relation to circumstances which existed at the time when the contract obligations are performed, but excluding circumstances which were under the control of the contractor. - These principles are applied by first considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control. Whether a reasonable time has been taken to do the works cannot be decided in advance, but only after the work has been done. - His Honour Judge Seymour thinks that consideration of a reasonable time for performance “... is likely to include taking into account any estimate given by the performing party of how long it would take him to perform…” - The focus of attention is likely to be upon the allocation of resources to performance of the relevant contractual obligations. In any sphere of commercial or personal life it is necessary for decisions to be made as to the relative priority of matters which need to be dealt with and as to the resources which it is appropriate to allocate to such matters. - It would be wrong in principle to proceed that an obligation to do something within a reasonable time was equivalent to an obligation to do it as soon as was practicably possible, subject only to not being held responsible for causes of delay without one’s control.
Type of Contract/ Contractual Relationship Supply of Material in Construction/ Steel manufacturer and Contractor
Supply of Goods and Services/ Provider of Software and Manufacturer and Retailer of Computers
76
Table 4.2: Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach
No
Cases
Explanation and Meaning of “Reasonable Time”
1
Rickards v Oppenheim [1950] 1 KB 616
-
A reasonable time meant, a reasonable time in the circumstances as they actually existed, that is, that the plaintiffs would not exceed a reasonable time if they were prevented from delivering by causes outside their control, such as strikes or the impossibility of getting parts, and events of that kind; and that on the evidence in this case it could not be said that a reasonable time was in that sense exceeded.
2
Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd [1955] 1 Lloyd’s Rep. 303
-
Reasonable time has to be considered in the light of the circumstances which prevailed after the contract. One has to consider what is the reasonable time provided for.
Type of Contract/ Contractual Relationship Sales of Goods/ Motor trader and Purchaser
Sales of Goods/ Buyer and Seller of marine engines
77
Table 4.2: Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
3
CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors [2001] HKCU 916.
-
A reasonable time for the completion of the Works is calculated. In calculating this time the Claimant was entitled to rely on the effects of non-payment and late payment of interim payments (Acts of prevention by Employer).
4
Shawton Engineering Ltd v DGP International Ltd [2005] EWCA Civ 1359
-
It was submitted that the fact that the experts had agreed what was an appropriate extension of time together with the originally agreed period was a fair indication of what should be regarded as a reasonable time for completion of the work, but that is in effect to treat the originally agreed period as being a reasonable period, notwithstanding that that period was agreed to under misapprehension Assessing a reasonable time meant having regard to all the circumstances, one of which was that the true work content which the respondent undertook was far greater than it had anticipated. What was a reasonable time had to be judged as at the time when the question arose in the light of all relevant circumstances. One such circumstance was that the respondent had originally agreed fixed time periods (although upon a misapprehension as to the work content)
-
Type of Contract/ Contractual Relationship Construction Contract/ Contractor and Employer Construction Contract/ Subcontractor and Sub subcontractor
78 4.3
Conclusion
From the findings, it can be concluded that in the absence of a stipulated period, calculating what would be a reasonable time for performance of the relevant services can take into consideration the allocation of resources to performance of the relevant contractual obligations. Different sized contractors can be expected to have different resources at their disposal and it is reasonable to suppose that resources and productivity will be essential factors to be considered. As in the case of Astea (UK) Limited v Time Group Limited83 Judge Seymour accepted that the plaintiff’s resources were an important concept, saying:
The focus of attention is likely to be upon the allocation of resources to performance of the relevant contractual obligations. In any sphere of commercial or personal life it is necessary for decisions to be made as to the relative priority of matters which need to be dealt with and as to the resources which it is appropriate to allocate to such matters. It would be wrong in principle to proceed that an obligation to do something within a reasonable time was equivalent to an obligation to do it as soon as was practicably possible, subject only to not being held responsible for causes of delay without one’s control.
Judge Seymour also seemed to think that consideration for a reasonable time for performance “…is likely to include taking into account any estimate given by the performing party of how long it would take him to perform…”. Such estimated completion period would be a reasonable point from which to assess reasonable time for performance.
83
Supra note 59.
79 In circumstances where the stipulated date has ceased to be applicable due to prevention or breach, the original contract completion date will tend to be accepted as a basis of reasonable time in ordinary circumstance so that the new reasonable time for completion will be arrived at by adding such additional periods of delay as can be shown to have been caused by the prevention as seen in CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors84. However, the problem arises when the original completion date was not itself reasonable as stated in the case of Shawton Engineering Ltd v DGP International Ltd85. It was submitted that the fact that the experts had agreed what was an appropriate extension of time together with the originally agreed period was a fair indication of what should be regarded as a reasonable time for completion of the work, but that is in effect to treat the originally agreed period as being a reasonable period. There was a misapprehension to the defendant’s true work content. It is clear that DGP seriously underestimated both the number of drawings which would be required and how long the work would take.
84 85
Supra note 81. Supra note 82.
CHAPTER 5
CONCLUSION AND RECOMMENDATIONS
5.1
Introduction
Previous chapters presented the literature review on time at large and reasonable time, as well as the analysis of the caselaws leading to findings on what is meant my “reasonable time”. This chapter concludes the findings of the research according to the research objective. Problems encountered during the research and the recommendations for future researches are also stated in this chapter.
5.2
Summary of Research Findings
In summary, examination of the ten caselaws leads to the following findings on the meaning of “reasonable time”:
- Reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him and excluding circumstances which were under the control of the contractor,
81 considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control.
- The condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, not withstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably.
- Performance is done with all due diligence having regard to all the existing circumstances, and there is no limit as to what are existing circumstances.
- Consideration of a reasonable time for performance is likely to include taking into account any estimate given by the performing party of how long it would take him to perform.
- The focus of attention in considering reasonable time is likely to be upon the allocation of resources to performance of the relevant contractual obligations.
-
Effects of acts of prevention by Employer can be considered in calculating a reasonable time for completion
-
The fact that the experts had agreed what was an appropriate extension of time together with the originally agreed period was a fair indication of what should be regarded as a reasonable time for completion of the work, but that is in effect to treat the originally agreed period as being a reasonable period
82 5.3
Problem Encountered During Research
The main constraint is insufficiency of time as only eight weeks is available for carrying out this research. This caused insufficient time to search and retrieve relevant caselaws for analysis. This limitation led to less cases being found to support the findings. With more cases, the meaning of reasonable time can be presented more comprehensively. Initial plans were also to search for more cases related to construction contracts but due to time limitations, this was not possible.
5.4
Conclusion
Time at large occurs when no time of completion is specified in the contract and where the stipulated date has ceased to be applicable by reason of prevention or breach.
The contractor’s obligation is then to complete the works within a
reasonable time. The meaning of reasonable time was presented.
As Lord Ashbourne puts it in the case of Pantland Hick v. Raymond & Reid86:
What is the meaning of this expression “reasonable time”? It is obvious that “reasonable” cannot mean a definite and fixed time. It would not be “reasonable” if it was not sufficiently elastic to allow the consideration of circumstances, which all reason would require to be taken into account.
86
Supra note 70.
83 Therefore, it is probably a question that can be determined by reference to all the factual information available that can be provided by the various project consultants involved, the contractor, its subcontractors and suppliers and statutory undertakings. Given that the entire scope of the contractor’s works needs to be considered, the full ambit of those factual matters is likely to be wide and the scope of expertise, in identifying the activity durations applicable, will depend in some measure upon usual practice and market conditions then prevailing in the place in which the works were built. (Pickavance, 2005).
REFERENCES
Andersen, C. B. (1998). Reasonable Time in Article 39(1) of the CISG – Is Article 39(1) Truly a Uniform Provision? University of Copenhagen. http://cisgw3.law.pace.edu/cisg/biblio/andersen.html Chappell, D., Powell-Smith, V. and Sims, J. (2005). Building Contract Claims. 4th ed. Oxford: Blackwell Publishing. Chow K. F. (2004). Law and Practice of Construction Contracts. 3 rd ed. Singapore: Sweet & Maxwell Asia. Davies, M. C. (1989). Avoiding Claims: A Practical Guide for the Construction Industry. London: E & FN Spon. Eggleston, B. (1992). Liquidated Damages and Extension of Time in Construction Contracts. Oxford: Blackwell Scientific Publications. Furst, S. and Ramsey, V. (1991). Keating on Building Contracts. 5th ed. London: Sweet & Maxwell. Gill, W. H. (1969). Emden and Gill’s Building Contracts and Practice. 7th ed. London: Butterworths. Guest, A.G. and M.A. (1975). Anson’s Law of Contract (24th Edition). London: Clarendon Press Oxford. Lim C. F. (2004). The Malaysian PWD Form of Construction Contract. Petaling Jaya: Sweet & Maxwell Asia. Malaysia Contracts Act 1950, Act 136 (1984). Kuala Lumpur: Malaysian Law Publisher Sdn Bhd. Martin, R. (2005). 52 Construction Issues Relevant to Malaysia and Their Resolution. Malaysia: James R Knowles Sdn Bhd. Murdoch J. and Hughes W. (2000). Construction Contracts Law and Management. 3rd ed. London: Spon Press.
84 Pickavence, K. (2005). Delay and Disruption in Construction Contracts. 3rd edition. London: Informa Professional. Powell-Smith, V., Stephenson, D. and Redmond, J. (1999). Civil Engineering Claims. 3rd ed. Great Britain: Blackwell Science. Rajoo, S. (1999). The Malaysian Standard Form of Building Contract (The PAM 1998 Form). 2nd ed. Kuala Lumpur: Butterworths Asia. Robinson, N. M. et al. (1996). Construction Law in Singapore and Malaysia. 2 nd ed. Singapore: Butterworths Asia. Sinnadurai, V. (1987). The Law of Contract in Malaysia and Singapore: Cases and Commentary. Singapore: The Butterworth Group of Companies. Sinnadurai, V. (2003). Law of Contract. 3rd ed. Kuala Lumpur: Butterworths. Vohrah, B. and Wu, M. A. (2003). The Commercial Law of Malaysia. Petaling Jaya: Longman. Wallace, D. (1995). Hudson’s Building and Engineering Contracts. 11th ed. London: Sweet & Maxwell.
BIBLIOGRAPHY
Ashworth, A. (2001). Contractual Procedures in the Construction Industry. 4th edition. Harlow: Pearson Education Ltd. Bramble, B.B. (1987). Construction Delay Claims. New York: John Wiley & Sons Inc. Carnell, N.J. (2005). Causation and Delay in Construction Disputes. 2nd edition. Oxford: Blackwell Publishing. Knowles, R. (2005). 150 Contractual Problems and Their Solutions. 2nd ed. London: Blackwell Publishing. Turner, D. (1989). Building Contract Dispute: Their Avoidance and Resolution. Essex: Longman Scientific & Technical.
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