Course of the Contract

Taking Possession

The contractor is to set the date for taking possession of the works.  The contractors is to begin the works,  y proceed with them and complete them on or before the date(s) of completion specified. This is subject to the various provisions for the contractor which potentially liable for extension of time.

If the date for possession is deferred,, the contractor is entitled to receive compensation for any loss incurred due to the dislocation of the contractor’s organisation. Any time lost should be ascertained and certified by the architect.

Practical Completion

Practical completion means that the works have been carried out to such a stage, that they can be taken over and used by the employer for the intended purpose.  This is notwithstanding that may be items of work or supply that are outstanding or any defects which are of trivial nature only and as are such that their completion or rectification does not interrupt with or interfere with the use.  Where they are outstanding they are to be completed within a reasonable time after practical completion.

Where the contractor believes the works are approaching practical completion, he is to notify the architect in writing.  When the architect is satisfied that they are practically complete, he notifies the employer in writing and the contractor at the same time.

The architect may, at his discretion instruct the contractor to postpone the execution of all or any arts of the painting, decoration and finishing work until practical completion.

The works are only deemed finally complete when all outstanding items of work as described and all work postponed on the instructions of the architect have been finalised and all defects, shrinkages and other faults, for which the contractor is liable, have been made good.

Liquidated Damages

If the contractor fails to complete the works by the date of completion specified, or any extended time provided under the conditions and the architect certifies, giving notice to the employer and the contractor, that they ought reasonably to have been completed, the contractor is to pay liquidated damages at the rate specified in the schedule to the contract.

Damages may be deducted from the sums due under the contract. Liquidated damages are fixed sums to compensate the employer for late completion of the works.

If any act or default of the employer delays the progress of the works, the architect on the application of the contractor may certify accordingly and the employer is to pay the contractor the damages the contractor has incurred by reason of the delay.

Extension of Time

If in the opinion of the architect, the work is delayed by reason of any of the following factors, the architect must allow a fair and reasonable extension of time for completion of the work.  The contractor is to give notice in writing of any such events.  The contractor is obliged to constantly use the best endeavors to prevent and minimise delay and proceed with the work.

In determining what extension of time is fair and reasonable, the architect is to have to regard to any negligence, omission, default of the contractor which caused or contributed to the delay.

The relevant events are as follows:

• Force majeure; this is some extraordinary circumstance outside the control of the party. It will generally refer to very extreme weather, a catastrophic strike, earthquakes, et cetera.
• delay in the contractor getting possession of the site.
• by reason of exceptionally inclement weather
• by reason of loss or damage covered by insurance.
• by reason of civil commotion, the combination of workmen, strike affecting any of the trades employed.
• by reason of the architect’s instructions providing for modification, inspection, postponement, et cetera.
• because the contractor has not received instructions from the architect in good time for which he has applied for in writing.
• because the contractor or nominated subcontractor has been unable for reasons beyond his control, to secure labour and materials as may be essential for the work.
• by reason of delay on the part of other contractors, artists and tradesmen engaged by the employer, not forming part of the contract
• by reason of any delay or default by the employer which delayed the works

If the delay is due to the employer’s fault or that of his agents, time under a default common law contract would be at large.  This would mean that the completion date would cease and the provision for damages for late completion would not apply.  The effect of the contract is to provide for a measured increase in time where applicable. In the above circumstances, the due date for completion is extended.

Practical Completion

Where the architect is of the opinion that the works have reached practical completion, he must issue a certificate to that effect.  This is done on foot of an application by the contractor.  See above in relation to the procedure and relation to the intention to issue the certificate.

The defects liability period will be stated in the contract particulars.  It commences on the day of practical completion named the architect certificate.

Where there are defects, shrinkages and faults which appear prior to the expiration of the defects liability period which is due to materials or workmanship, not being in accordance with the contract, the architect must give a written instruction and the contractor is to make it good within the reasonable time as its cost.

These instructions may be issued at any time and on more than one occasion throughout the defects liability period. A final list of defects is distributed within 21 days after the expiration of the period.

Partial / Phased Completion

The contract documents may provide for completion of the works in phases, parts or sections.  The contracts allow for phase or sectional completion.

The architect may on application to the contractor, issue a certificate providing for possession of the relevant part.  This would certify the total value of the work and the percentage which it represents of the entire value.

The relevant part as and from two days after the date of possession is at the sole risk of the employer from insurance and other perspectives. A certificate is issued in respect of the relevant part and the defects liability period begins on that day. The positions in respect of payment are broadly the same as above.

Default by Contractor

If the contractor makes certain serious and continuing defaults, a procedure exists to terminate the contract.  If the defaults mentioned below continue for 10 working days after notice by registered post or letter is given to the contractor specifying the default, the employer, without limiting any other rights he may have, and at the latest within 10 working days, may terminate the contract.  The notice may not be given unreasonably or vexatiously. It is not effective if the employer is at the time of the notice, in serious breach of the contract itself.

The relevant defaults are as follows:

• has without reasonable cause, wholly suspended works before completion;
• has failed to proceed with the works with reasonable diligence;
• has refused and persistently neglected to comply with notices in writing with the architect requiring removal of defective work or improper materials;
• has failed to execute the work in accordance with the contract, and is, in the opinion of the architect, in serious breach of the obligations.

After notice is given as above, the contractor may not remove plant, materials and equipment and the employer shall have a lien on them. The lien lasts for one month, from the date of notice being given and continues provided the employer has entered and taken possession of the work and site.  The lien does not apply to plant, materials and goods which belong to any subcontractor unless the value thereof has been included in a certificate for which the contractor has received payments.

If the contractor commits an act of bankruptcy or liquidation,  if a receiver is appointed or an examiner presented a petition, the employer may terminate the contract.

Consequences

If the contract ends, the employer may employ and pay a contractor or other person to carry out and complete the work.  He may enter the site and use all materials, goods, temporary buildings, plants and apparatus and may purchase materials necessary.

The contractor, if required by the employer and without further payment, may be required to assign the benefit of any contracts for the supply of material or works, and the employer shall pay the agreed, if unpaid sums, in respect thereof.

In this case, no payments are to be made to the contactor until after completion of the work.  On verification of the accounts, the architect is to certify the amount of expenses properly incurred by the employer and if such amount added to the money paid, exceeds the total which would have been payable on due completion, the same is repayable to the employer by the contractor.

If the case is otherwise, it is a debt payable by the contractor to the employer.  Where there is default by the contractor, the employer may take steps to secure the site at the contractor’s expense.

Default by Employer

If the employer does not pay the contractor within the time for honouring certificates due, the contractor, after even five working days’ notice to the employer, may suspend the work.  This extension may be for 10 working days.  On the expiry of this period, unless payment has been made in the meantime, the contractor may terminate the contract. Where work is suspended, time is extended by two days for each working day of suspension.

If the employer becomes insolvent or subject to an insolvency process, the contractor may without prejudice to any other rights, terminate the contract.

On termination of the contract, then without prejudice to the contractor’s other rights, he may thereupon, with all reasonable dispatch, remove all goods materials machinery plant and equipment for the site and facilitate his subcontractors in so doing.

The employer is to pay to the contractor the value of work completed at the date of the termination.

• The value of work commenced, executed, but not completed is to be ascertained in accordance with the general procedures under the contract.
• Cost of materials and goods, property ordered and delivered to the site and actually paid for by the contractor, of which he is bound to accept delivery at. On such payment, the goods become the property of the employer.
• Reasonable costs for removal
• Any loss or damage caused to the contractor due to the termination.