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Christmas quiz 2010

Once again, it’s time for the Berwin Leighton Paisner Christmas quiz. Why not test your knowledge of construction law? This year’s quiz is as challenging as ever.

For answers to all the questions and to find out how you did, see our answers document.

1. Claims in tort

A contractor enters into a contract with Own Co (the owner) to build and sell a new building to Own Co. The building contains a latent defect that renders it dangerous to persons or other property. Any action under the contract is time barred. Assume that an action in tort is not time barred.

Which of the following statements is true?

(a) The contractor owes a duty of care in tort in relation to defects that cause either personal injury or physical damage to property other than the property itself.

(b) The contractor does not owe a duty of care in tort not to cause economic loss to Own Co.

(c) The contractor does owe a duty of care in tort not to cause economic loss to Own Co.

(d) A contractor cannot owe concurrent duties of care in contract and tort.

(e) In the recent case of Linklaters v McAlpine, How Engineering & Others, Akenhead J confirmed that there is no place for the complex structure theory in cases such as the one outlined above.

For the answers to question 1, see our answers document.

2. FIDIC

2.1    Which of the following statements are true?

(a) The FIDIC Silver Book imposes a fitness for purpose obligation on the contractor whereas the FIDIC Red Book does not.

(b) Under the FIDIC Silver Book the contractor is entitled to an extension of time where the works are or will be delayed by any of the following:

(i) variation;
(ii) any other provision; or
(iii) any delay, impediment or prevention caused by the employer.

(c) Under the FIDIC Red Book the contractor takes responsibility for both verifying and interpreting the site data made available by the employer.

(d) Under the FIDIC Silver Book, the engineer plays a crucial role by acting as the employer’s agent. For example, for ordering variations, making decisions as regards payment certificates and resolving disputes between the employer and contractor.

2.2    Under which of the following forms of contract does the contractor take full responsibility for the design of the works:

(a) FIDIC Silver Book (FIDIC).
(b) IChemE Conditions of Contract for Process Plant (IChemE).
(c) IMechE General Conditions of Contract MF/1 (Rev 4) (IMechE).

For the answers to question 2, see our answers document.

3. Delay and concurrent delay

3.1 Following the decision of the Inner House in City Inn Limited v Shepherd Construction Limited, where there is concurrent delay caused by both the contractor and employer, which of the following reflects English law (one point):

(a) The contractor does not get an extension of time.
(b) The contractor gets an extension of time.
(c) The court will apportion the delay between the parties.
(d) The court will apply the “but for” test to determine whether or not the Contractor is entitled to an extension of time.
(e) The court will apply the prevention principle.

3.2 Where a contractor has submitted a programme indicating completion one week before the contractual completion date, and the contractor is then delayed by the employer by one week, and in fact completes on the contractual completion date:

(a) The contractor is entitled to one week’s prolongation costs.
(b) The contractor is entitled to its prolongation costs during the week to the extent it can show they were caused by the employer.
(c) The contractor is not entitled to its prolongation costs during the week.

For the answers to question 3, see our answers document.

4. LDEDC Act 2010

4.1 Which of the following statements is true about the Local Democracy, Economic Development and Construction Act 2009 (LDEDC Act 2009) (there may be more than one):

(a) Third parties may give section 110A payment notices.
(b) If the payer fails to give a timely section 110A payment notice the payee may give a payment notice at any time before the final date for payment.
(c) The payer is not obliged to give a “withholding notice” if the payee goes insolvent before the date upon which the payer is required to give such withholding notice.
(d) The adjudication provisions of a construction contract are required to be in writing.

4.2 What is the current anticipated “in force” date?

For the answers to question 4, see our answers document.

5. Bribery Act 2010

5.1 When does the Bribery Act 2010 come into force?

(a) It is already in force in its entirety.
(b) April 2011.
(c) October 2011.
(d) It is already in force in its entirety apart from section 7(2) (adequate procedures defence), which comes into force in April 2011.

5.2 In order to secure a conviction for bribing another person under the Bribery Act 2010, a prosecutor must prove an element of dishonesty or corrupt intent (one point). True or false?

For the answers to question 5, see our answers document.

6. Termination

6.1 Your client, Mr Beasley,  wishes to terminate a building contract he has entered into with YHC.  It is an unamended JCT Design and Build Contract, 2005 edition, Revision 2 2009. He asks you which of the following statements apply to Section 8 (Termination) of his JCT contract:

(a) It contains provisions allowing Mr Beasley to terminate at any time for his convenience.
(b) It provides that Mr Beasley can terminate once appropriate default notices have been given and the contractor has been given time to remedy a default (other than insolvency and corruption where termination is immediate).
(c) It contains the parties’ sole and exclusive rights in the event of termination under the contract.
(d) It is without prejudice to any other rights and remedies of Mr Beasley or the contractor (as appropriate).

6.2 Mr Beasley also asks you which of the following apply to his JCT contract:

(a) YHC is entitled to recover its lost profit on the contract if terminated due to Mr Beasley’s default.
(b) The contract terminates automatically in the event of insolvency of YHC.
(c) Provisions of the contract which relate to payment or release of retention cease to apply upon the insolvency of YHC, whether the contract is terminated or not.
(d) Mr Beasley can sell all plant and equipment belonging to YHC to pay for completing the remainder of the works.

For the answers to question 6, see our answers document.

7. Limitation

7.1 In an action for negligence by a building owner against a consultant for negligent design, the cause of action accrues:

(a) When the building owner relies on the negligent advice.
(b) When the building owner suffers economic loss (that is, on completion of the building).
(c) On the date when the relevant damage occurred.
(d) On the date when the damage was or ought reasonably to have been discovered.

7.2 In an adjudication, the losing responding party has complied with the  adjudicator’s decision and paid sums to the winning party. It now wants to challenge the adjudicator’s decision by legal proceedings and recover sums paid in compliance with it, but the underlying cause of action is statute barred. Which of the following statements is a correct summary of the legal position:

(a) The responding party cannot now recover these sums in legal proceedings: the claim is statute barred.
(b) The responding party can bring legal proceedings seeking a negative declaration only (that is, a declaration that it has no liability to the referring party).
(c) The responding party can bring legal proceedings to recover these sums and, if successful, to be repaid all sums paid.  A term can be implied into the contract to this effect and this implied term creates a new cause of action at the time of payment in compliance with the adjudicator’s decision.

For the answers to question 7, see our answers document.

8. Contribution

8.1 Which of these statements is false?

(a) Generally, a claimant bringing a claim for breach of contract against parties who are jointly liable under the same contract must join both parties into the proceedings to enforce the promise.
(b) Generally, a claimant bringing a claim against parties who are jointly liable in tort must join both parties into the same proceedings.
(c) Parties who are jointly liable to a claimant in tort are also always severally liable.

8.2 Which of the following statements about “net contribution” clauses (“NCC”) is true?

(a) The purpose of an NCC is to prevent a consultant or contractor from being held liable for breaches of duty by others.
(b) An NCC limits a consultant’s or contractor’s liability for breach of contract to its liability under the common law.
(c) An NCC gives a consultant or contractor some protection against the consequences of their own breaches of duty.
(d) An NCC limits a consultant’s or contractor’s liability for breach of contract to 50% of its liability.

For the answers to question 8, see our answers document.

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