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Your contract is more than the words on the page
It's often said that all we have are the black words on the white page.
But sometimes we can rely on words are not written down in the contract. They are written down in other places. These are "implied terms."
What are implied terms? A common example of an implied term is when the client has not provided access in accordance with the contract. This means that the contractor cannot begin their works on time.
In our example, the contract has an access date and a completion date. The client is able to deduct damages if the contractor hasn't finished their works by the completion date. The contract doesn't allow the contractor to ask for this completion date to be changed.
So, what can we do to avoid having damages deducted? Well, we may be able to rely on the prevention principle. This is a legal principle which states that a party cannot take advantage of its own wrong.
We can rely on the experience of others that have been in this situation before. Many contractors have been to court in similar situations. Judges have decided that it is not fair to deduct damages when a client has not provided access. If the circumstances are similar, we may be able to rely on these decisions.
What this means is we can notify the late access as a variation as if the wording of the contract allowed us to. We can treat the implied terms as if they were written into our contract.
The prevention principle doesn't just apply to delayed access. There may be other events which we can use to stop the client from deducting damages. For instance, if the client has issued a variation which increased the scope of work. In this instance, we may be able to use the principle to avoid damages.
Once this issue is resolved, it is important to make sure it doesn’t happen again. The way to do this is to make sure that we have clauses in our contracts that allows us to claim extensions of time when access is delayed or the client issues variations.
The following is an example of a contract clause that allows the completion date to be changed for Relevant Events, which could be delayed access, a variation or something else:
"If any of the events which are stated to be a cause of delay are Relevant Events; and completion of the Works is likely to be delayed beyond the Completion Date, then, the Contract Administrator shall give an extension of time by fixing such later date as the Completion Date for the Works as he then estimates to be fair and reasonable."
We need to ensure that all our contracts include clauses that allows us to claim extensions of time.
That’s all for today.
See you next week.
Helping contractors deliver profits on construction projects
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