ABSTRACT
The basic idea of the extension of time and liquidated damages clauses in SBC, IC/ICD, MW/MWD and DB is very simple and straightforward. If the contractor does not complete the Works by the date for completion, the employer is to be paid pre-agreed damages. If, however, the contractor is delayed due to certain specified events, the contract period will be extended, thus releasing the contractor from the obligation to pay damages for the overrun in respect of those events. In essence, that is all there is to the provision. In practice, however, the application of the clauses seems to cause problems out of all proportion to the issues at stake. Part of the difficulty lies in the number of myths and misunderstandings which cloud the sensible operation of the contract provisions. The extension of time provisions are for the benefit of the contractor and
the employer. It is easy to see that the contractor benefits from an extension of time because it releases it from the obligation to pay liquidated damages. The benefit to the employer is a little more complex. Under SBC, IC/ICD clause 2.4 and DB clause 2.3 the employer must give
possession of the site to the contractor on the date for possession stated in the Contract Particulars. The contractor is obliged to commence the Works on the date for possession and regularly and diligently proceed with them so that they are complete on or before the date for completion stipulated in the contract. MW clause 2.2 and MWD clause 2.3 are to much the same effect, but without the requirement to proceed regularly and diligently (albeit that failure to do so is a ground for termination under clause 6.4.1.2). Under SBC, IC/ICD and DB, but not under MW/MWD, the employer may defer possession by up to six weeks. It is important to remember that under the general law the contractor’s
obligation to complete the Works by the contractual completion date is removed if the employer or the employer’s agents are responsible for some or the whole of the delay [1]. Such actions as the issue of instructions or any kind of interference or obstruction fall into this category. In such cases time becomes ‘at large’, that is to say that there is no longer any date by which
date from which liquid-obligation is then to complete the Works within a reasonable time. A reasonable time may, of course, be the length of the original contract period plus the period for which the employer has caused delay. The employer may still claim damages, but instead of merely being able to deduct them, the employer is faced with the problem of having to prove them first. The above general rules may be amended if there is an express term in the
contract that allows the completion date to be extended [3]. There is such an express term in the six contracts under consideration that allows the architect or the employer under DB to grant an extension of time for employer’s defaults and thus preserve the employer’s right to deduct liquidated damages for any period of overrun beyond the extended date. The benefit to the employer is now clear. The extension of time provisions are contained in clauses 2.26-2.29 of SBC,
2.19 and 2.20 of IC/ICD and 2.23-2.26 of DB. (The provisions in MW and MWD are somewhat different and contained in clauses 2.7 and 2.8 respectively which will be considered later.) The provisions clearly take account of two distinct types of delay:
delays caused by the employer (these are the most important); delays caused by events outside the control of either the contractor or
the employer.
