Date should be written in contract; CONSTRUCTING EXCELLENCE.
IN a Technology and Construction Court case, Mr Justice Coulson was required to decide on a matter which involved a contractor claiming damages from its subcontractor because of an alleged implied term in relation to interim progress.
The case involved a groundworks contractor who was under subcontract to a main contractor, the material obligations of which were to start work in September 2010, take 46 weeks and complete in August 2011. Towards the end of the subcontract duration, though before its completion date, the contractor issued a withholding notice which sought to set off the amount of over pounds 130k from sums otherwise due for unliquidated delay damages. The grounds on which this was claimed was cited as breach of an implied term in which the subcontractor failed to carry out the works, in accordance with the interim dates within an activity schedule.
It was held that, though the activity schedule was a contract document, there was no expressed or written term requiring the subcontractor to meet the interim dates proposed. The contractor relied on the age-old adage that the subcontractor must proceed 'regularly and diligently' and the only fair measure of such pace could only be the dates within the activity schedule.
Mr Justice Coulson disagreed with the contractor and held that there was no implied term which obliged the subcontractor to proceed in conformance with any other dates than that expressed eg, the subcontract period or completion date.
The fundamental reason for his decision was that there was no need to imply a performance term in relation to interim progress of the subcontract works if the terms of the subcontract expressly dealt with performance and default of the same.
So what does this mean? Though advice should always be sought, in general terms a subcontractor may not be bound by the interim dates within the main contract programme unless those dates are expressly written into a contract, or a term expressly seeks performance of interim dates within a main contract programme.
It is certainly true that such a decision reminds us that careful consideration in relation to expressing interim obligations of subcontracting organisations is required when drafting contract terms.
For more information on Constructing Excellence in the North East, contact chief executive, Catriona Lingwood, on 0191 374 0233 or email@example.com Pete Tighe, partner at the Blaydon-based construction law specialist and management consultancy Geneva Group