The dust is slowly settling over the arguments about how contracts should be interpreted. We know that “this is not a literalist exercise focused solely on a parsing of the wording of the particular clause” and that “[t]extualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual … Continue reading Contract interpretation – who has commercial common sense?
If the Brexit deal, ongoing Covid-19 developments and updates on the Building Safety Bill and the Corporate Insolvency and Governance Act isn’t enough to keep those in the construction industry on their toes, the latest guidance from HMRC is that the VAT reverse charge on construction services will commence from 1 March 2021. In our … Continue reading The VAT reverse charge is coming soon. So what else is new?
Whether it’s the electric motor to the combustion engine or cryptocurrency to currencies, every industry seems to have a disruptor – perhaps we’ve found one in FIDIC for the construction industry and its re-imagining of the use of liquidated damages (LDs) in the soon-to-be published Green Book. The special pre-release version of the new edition … Continue reading FIDIC the disruptor: Liquidated damages to compensate the contractor for employer delay
Last month, in what feels like a lifetime ago (when there was no third lockdown or even Tier 4, no new COVID variant and no Brexit deal), I attended the digital FIDIC International Contract Users’ Conference from the comfort of my home. Top marks for effort by the organisers and for the virtual networking possibilities … Continue reading FIDIC contracts – a preview of what is to come
NEC4 was published in 2017. The first set of amendments were published in January 2019 and now, in the space of three years, we have the second set, published in October. Most standard forms do not publish updates so prolifically and (certainly for this year with all its changes) you could argue more’s the pity. … Continue reading NEC4: 2020 amendments
We have explored various topics as part of our intellectual property in construction series. To continue our discussion, we delve into some further thoughts on other common queries that we receive. In this article we will look at: Should a copyright licence be subject to the payment of fees? What happens to a copyright licence … Continue reading BIM-used copyright: Dealing with emerging technologies in construction
Cash-flow management remains one of the main problem areas in construction and engineering projects. Issues in getting paid, serious enough on their own, are often an early warning sign for a project heading into wider difficulties. There can of course be a number of culprits for cash-flow difficulties. A few weeks’ ago, my colleague, Yousef … Continue reading Payment down the chain
Where the contractor has become insolvent, what obligations can an employer enforce when stepping-in to a previously novated professional consultant’s appointment in a design and build scenario? A question that routinely arises in practice, this scenario is perhaps more relevant now than ever, not only because of COVID-19 but also because of the Corporate Insolvency … Continue reading Novation, step-in and a potential problem with CIGA 2020
When a project goes so poorly that an employer feels obliged to terminate its main contractor, the employer will often take an assignment of various sub-contracts. But what exactly does it mean to “assign a sub-contract”? Of course, the employer may also claim against the main contractor for delay damages, additional costs to complete and … Continue reading Assignment of sub-contracts – benefit and burden, risk and reward in the TCC
In this challenging economic climate, contractors are striving to keep their businesses afloat. Healthy cash flow is key and a major barrier to achieving this can be the slow release of (or indeed the failure to release) retention. The idea of a retention in theory is simple: a way of incentivising the contractor to return … Continue reading Retentions under scrutiny and the transferred loss principle
From time to time, those seminal cases we all studied during the early parts of our career pop up in practice. We’re all familiar with them: the snail in the bottle in Donoghue v Stevenson; the spurious sounding flu remedy in Carlill v Carbolic Smoke Ball Co — the list goes on. Of these key … Continue reading Global Water Associates: applying Hadley v Baxendale
Question: What do the Oslo Picasso murals “The Seagull” and the “The Fishermen” and the Dutch De View Jaargetijden have in common? Answer: They both have been subject to recent high cost, high profile litigation that dragged on for years and which concerned moral rights. Yes “moral rights” caused all the trouble for these projects … Continue reading Moral rights: why should developers care?
In the UK, the professional indemnity insurance (PII) market is hardening. It is becoming increasingly common to find that contractors and consultants do not hold (or are struggling to obtain) PII at the level and on the terms that were negotiated and agreed with their employers. At the same time: There has been a proliferation … Continue reading A tough (PI insurance) market: why it matters, and what parties can do about it
The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June 2020 after a fast-tracked consultation process. Intended to provide a lifeline to struggling businesses during the COVID-19 pandemic and beyond, it consists of temporary measures, meant to alleviate the short-term disruption caused by the pandemic and permanent measures, which are … Continue reading Supplier beware: the CIGA 2020
COVID-19 is causing uncertainty for business and investment strategies worldwide, the energy sector included. Despite this, investors are increasingly looking to renewables as a way to meet growing energy demand while decarbonising energy supply. While countries across Asia-Pacific have shown strong appetite for wind power, the risk of natural disasters, inadequate government support and the … Continue reading Wind of change – is NEC the future for wind projects in APeC?
Waste projects are sometimes perceived as the less glamorous side of our construction and infrastructure practice. That does them a disservice: they involve innovative technologies and the development of sustainable infrastructure solutions. The interface of those technologies with the allocation of risk for design and construction can present interesting and knotty contractual issues. For example, … Continue reading Not to be sniffed at… implied terms in the context of termination
The future is very uncertain at the moment. There is significant financial uncertainty in the construction industry. With financial uncertainty comes insolvencies, and with that risk comes issues about ownership of goods and materials on site. As a team we have been asked a number of questions about retention of title recently, and answering these … Continue reading Hands off! Ownership of goods and materials on construction projects
2020 is anything but normal. It is rare for there to be any judicial treatment of the ICC Uniform Rules on Demand Guarantees No. 758 (URDG 758) but 2020 has already brought us not one but two cases on its interpretation and applicability. URDG 758 applies to all demand guarantees (commonly performance bonds or advance … Continue reading URDG 758: finally tested and it does what it says on the tin
Questions about intellectual property rights routinely arise during construction contract negotiations and serve as a refreshing reminder that COVID-19 issues are not the sole focus of negotiations at the moment. Copyright is one type of intellectual property right and is the area where we tend to encounter the most queries. This blog, the first in … Continue reading Copyright in construction: some common queries
Insofar as “smash and grab” disputes go, Broseley London Ltd v Prime Asset Management Ltd is simple and straightforward. However, the judgment touches upon an issue which is anything but straightforward: can an employer start a “true value” adjudication without first paying the notified sum? For those who are new to “smash and grab” practice, … Continue reading “Smash and grab” update: can an employer start a “true value” adjudication without first paying the notified sum?
Last year Build UK (BUK) published its non-binding recommendations on the contract terms its members should (as a minimum) refrain from using. The recommendation had the commendable aim of forming “a new common ground between clients and the supply chain on contractual practice in the construction sector” with the key objectives being “to promote collaboration, … Continue reading Build UK guidance on implementing its recommendation on contract terms: one step forward, two steps back
Electronic signatures and virtual signings (using the Law Society guidance following the “Mercury” Tax case) have been gaining popularity for some time with electronic execution given an added boost in Autumn 2019 when the Law Commission published its report on e-signatures. The report’s key findings were that: Deeds and documents can be signed electronically so … Continue reading Electronic execution: another “new normal”?
It may understandably not be at the forefront of people’s minds as the industry responds and reacts to the COVID-19 pandemic, but in February 2020 the government finally published a summary of responses to its Construction Act 1996 consultation. Matt Molloy has previously blogged on the responses from an adjudication-perspective so I thought it would … Continue reading Construction Act consultation – summary of responses
“Documents create a paper reality we call proof.” (Mason Cooley, American writer, 1925 – 2002) Construction and engineering projects, and the disputes that sometimes arise from them, throw up a great deal of paperwork and data. While that is probably true of the majority of joint enterprises that continue over a substantial period, it is … Continue reading Document production on construction projects: A reality called proof
Tenants and building owners frequently devolve management of their repair and maintenance responsibilities to management companies, who often enter into agreements with contractors for the repair and maintenance of the buildings they manage. This can be an attractive prospect from an administrative point of view, keeping such contractual arrangements at arm’s length from an occupier … Continue reading I tort I was covered? Management companies procuring maintenance works – a common pitfall
You don’t have to be an avid reader of specialist construction magazines to know that the quality of new build housing is a big issue at the moment. Both the national press and social media are awash with stories (often sensationalised) of defects, cracks, subsidence, fire safety issues and all manner of other problems. The … Continue reading Crumbling edifices (again) – defective new homes and the “insurance” problem
Last month I attended the FIDIC International Contract Users’ Conference in London, two years after the formal launch of the 2017 Red, Yellow and Silver Books. I wanted to find out whether anyone was using them and if so, what did they think? In my blog following the 2017 launch, I made some initial observations. … Continue reading FIDIC 2017: two years on
January is undoubtedly the most popular time of year for new year resolutions, but the Business & Property Courts (B&PCs) got a head start on all of us by publishing their 2020 resolutions in early December. As many of you will be aware, in 2018 the B&PCs set up a Witness Evidence Working Group, consisting … Continue reading Witness evidence in the TCC: reform is on the way
Since my colleague Eveline Strecker last blogged about modular construction, it has continued to develop in popularity. The more we see of modular, the more it becomes clear that it is a very different beast to “traditional” construction projects, demanding an evolution in procurement routes and contract content. The problems with shoehorning a modular project … Continue reading The Construction Act and modular construction projects
This summer I had the pleasure of traveling to Toronto and meeting Canadian construction lawyers to discuss the introduction of a prompt payment and adjudication regime in Ontario on 1 October 2019. As Matt Malloy outlined in his blog from 2017, the provisions of the Ontario Construction Act take inspiration from the UK. However, while … Continue reading The Ontario Construction Act: building on the UK prompt payment and adjudication regime
In a step change from the days of Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (trading as Medirest) in which the Court of Appeal rejected the notion of a general doctrine of good faith, many construction contracts now include an express requirement to act in “good faith”. This trend … Continue reading New Balance fails to equalise in sponsorship dispute
Have you read the SCL’s delay and disruption protocol? I am sure you have, as the SCL website notes that it has been downloaded 38,500 times. But if not, I would recommend it to you, in particular its helpful glossary of terms, its reminder of the various formulae for calculating lost overheads and profit, and … Continue reading Judicial treatment of delay analysis: raw data preferred
The recent TCC decision in Flexidig Ltd v A Coupland (Surfacing) Ltd piqued my interest. My first thought was why did Flexidig commence proceedings against Coupland, and why did it bring the claim that it did? It provides a rare example of the tort of procuring a breach of contract arising in the construction context … Continue reading Flexidig v Coupland – claims in economic torts
For contracts that typically amount to a few pages, collateral warranties undoubtedly generate more than their fair share of case law. Normally, those cases are run of the mill but every now and then one comes along that gives pause for thought. Such was the case for me with the judgment of the Outer House … Continue reading British Overseas Bank v Stewart Milne – spotlight on collateral warranties
The courts enjoy a fairly regular diet of cases concerning the validity of calls on performance bonds and similar securities. I have blogged on this before, in early 2017. Bond issuers who are reluctant to pay out on a bond will raise either: A formal defence, for example that the demand is invalid because it … Continue reading Assignment and performance bonds: Sumitomo Mitsui v Euler Hermes
What is the reverse charge? Coming into effect on 1 October 2019, the reverse charge in relation to building and construction services is set to bring about a major change in how VAT is handled in the construction sector. All those involved – including developers – need to be aware of when it will apply … Continue reading VAT reverse charge
The Court of Appeal recently considered the application of, and relationship between, no oral modification (NOM) and entire agreement clauses. While this was not a construction case (the appeal in question concerned a contract for the provision of dental services), both types of clause are commonly included in construction contracts. The judgment also restates a … Continue reading Biting off more than you can chew: no oral modification and entire agreement clauses
A developer client recently called me for advice on a new residential development project. My client was in the process of negotiating building contract terms, including the contract sum, with its preferred contractor. In the meantime, both parties were keen for the contractor to start the works in order to keep to the project programme. … Continue reading Quantum meruit – how much is too much?
Build UK recently published a set of minimum standards to be applied when using retentions, as well as their roadmap to zero retentions by 2023. This follows on from Build UK’s non-binding recommendations on contract terms, about which my colleague, Adriano Amorese, recently blogged. For those of us involved in drafting and negotiating construction contracts, … Continue reading Retention release?
I read Matt Molloy’s blog, What happens when adjudicators make a mistake? with interest, as he mentioned the case of Willow Corp Sarl v MTD Contractors Ltd. Bryan Cave Leighton Paisner acts for Willow in a dispute with MTD in relation to its role as main contractor in the design and construction of the Nobu … Continue reading Willow v MTD: a successful Part 8 challenge after Hutton v Wilson
The idiom “all duck or no dinner“, if you’re not familiar with it, means “all or nothing“. I once worked for a partner that was quite fond of using it, particularly in the context of limitation periods and time bars: if you’re in time, your clients will usually have a smorgasbord of dispute resolution options … Continue reading Sitol v Finegold: NEC3 adjudication time bar applied
Earlier this year I found myself waiting for the Court of Appeal to bring the next instalment in a series of interesting decisions regarding subrogation claims in insurance disputes (not a contradiction in terms, I promise!), which I and my colleague John have been taking it in turns to blog about (see Joint insurance and … Continue reading A missed opportunity – Haberdashers and subrogation
Anyone who has used a GPS knows that sometimes the shortest route can take a mighty long time. On a trip to Pebbly Beach in New South Wales it took me down a little dirt road with so many potholes it resembled swiss cheese. If that wasn’t bad enough, the road led to a dead … Continue reading Beware the short-cut – are preliminary issue hearings a bad idea?
Build UK, a leading representative organisation for the construction industry, has published a non-binding recommendation on which contract terms its members should (as a minimum) refrain from using. The recommendation “seeks to form a new common ground between clients and the supply chain on contractual practice in the construction sector” with the key objectives being … Continue reading Build UK’s recommendation on contract terms: a step in the right direction
As construction disputes lawyers, we see our fair share of settlement agreements. And not just the traditional full and final settlements, but also one page final account settlements, and “line in the sand” agreements in which the parties seek to renegotiate elements of the contract while it is in progress. These “line in the sand” … Continue reading Re-baselining construction projects: drawing a line in the sand
Imagine the scene: you are the responding party to an adjudication and right at the outset you spot that the adjudicator has been incorrectly appointed and does not have jurisdiction. You try to call a halt to the proceedings. The claimant refuses. Surely you can get an injunction? Why go to all the trouble, expense … Continue reading Injunction not granted in ongoing adjudication: Billingford v SMC Building
A tenant client was recently surprised by a clause in its agreement for lease (AFL). The clause allowed the landlord to defer the target access date and long stop date commensurate with any extension of time granted by the Employer’s Agent (EA) under a JCT Design and Build contract for the landlord’s works. It was … Continue reading Employer’s Agents and agreements for lease: the loyalty only goes so far…
Imagine this: a contractor undertakes to perform certain works by a specified date, and agrees to pay liquidated damages (LDs) if it does not complete by that date (subject to any entitlement to an extension of time). The contractor, through its own fault, is late and does not complete by the specified date. In fact, … Continue reading Can liquidated damages be claimed after termination? Wrong question!
I read with interest Paul Bury’s blog, which touched on the case of Zagora Management Ltd v Zurich Insurance plc as it relates to claims against approved inspectors. I’m interested in the case for a different reason: it’s one of the first superior court decisions, post-Grenfell, that deals with the liability consequences of high-rise properties … Continue reading Combustible cladding: early judicial guidance from the TCC
Construction and engineering contracts often contain provisions specifying that, within a particular time, one party (traditionally the contractor) must notify the other (the employer and/or the contract administrator) of a claim or the likelihood that it might advance a claim. Sometimes these “time-bar” notice provisions are elevated beyond being merely an obligation, to the status … Continue reading Time bars under FIDIC 2017 – are more notices the answer?
Summer 2018 will be remembered as a special time by many readers of this blog: whether it was the spectacular weather, the giddy heights hit by the England football team, or Fraser J’s decision in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (In Liquidation), it was a summer to remember. To recap … Continue reading Adjudication and insolvency – guidance from the Court of Appeal
Many a construction dispute turns on defects. A significant subset of those turn on whether the existence of defects prevents practical completion from taking place. It’s not surprising that these situations are contentious: contractors are keen that practical completion is certified so as to avoid or limit their liability for liquidated damages, trigger the return … Continue reading Practically complete or completely impractical? Navigating the pitfalls of what constitutes practical completion
Whether liquidated damages (LDs) can be claimed after termination is a question which comes up regularly. It is very relevant in the current climate where contracts are often terminated following contractor insolvency. If I were devising a construction law exam paper, this classic question would undoubtedly appear. An unlucky student sitting my imaginary exam paper … Continue reading Do liquidated damages survive termination? (answer in no more than 1000 words)
As we all get into the festive spirit you may well find yourself chatting to family or friends about their latest project. Some may ask for your opinion or advice. But don’t get carried away; remember the cautionary tale of Burgess v Lejonvarn before offering any free advice.
A recent decision from the Chancery court offers some helpful guidance on the interaction between entire agreement clauses and claims for misrepresentation. Many practitioners may be under the impression that an entire agreement clause has the effect of defeating a claim in misrepresentation. However, this case shows that is not necessarily the case. If parties … Continue reading Nottingham Forest 1 – 0 Entire Agreement
With the much-anticipated draft withdrawal agreement being revealed last week, I thought it was an opportune time to reflect on the impact of Brexit on the construction industry, and in particular, what effect it is having on parties entering into construction contracts in the current market.
In North Midland Building Ltd v Cyden Homes, the Court of Appeal held that parties to a construction contract are free to apportion risk in the event of concurrent delay. For more detail on that case, see my colleague, Alexandra Clough’s blog post, Concurrent affairs: North Midland Building Ltd v Cyden Homes. Cyden (as employer) … Continue reading North Midland Building v Cyden: apportioning risk for concurrent delay in the UAE
In the beginning… Happy birthday, Practical Law Construction! A lot has changed in the ten years since the “blog page” came into being. In October 2008 we were living in St Albans, our son was still at school and Labour were in power. Lehman Brothers had recently collapsed and the global financial crisis was in … Continue reading Practical Law Construction: 10 years a blogging
Employers under construction contracts often find themselves under time pressure to get started with construction of their projects prior to concluding negotiations with their preferred contractor and before the building contract is entered into. In such a scenario, employers commonly choose to rely on a letter of intent. This should give the contractor comfort to … Continue reading Saved by silence: Letters of intent and Arcadis v Amec
Some of the world’s most iconic buildings were conceived as a result of architectural competitions. You may be surprised how often such competitions result in controversy. Jorn Utzon submitted his winning concept for the new opera house in Sydney in the mid-1950s. He walked away from the project 11 years later (7 years before its … Continue reading When design competitions go bad
Last year, a developer client raised concerns about the solvency of its main contractor, Carillion. With over 50% of the works still to be completed, the client wanted some advice as to how it could manage the risks (legally and practically) if the contractor did go “pop”. In January this year, the concerns became a reality. … Continue reading Apocalypse Now? Contractor insolvency: an employer’s survival guide
A contract can be a long term commitment. Over the course of a contract, things happen. Circumstances change. Force majeure clauses generally allow parties to allocate contractual risk, by limiting liability, excusing performance or providing for termination, if unusual or unfortunate circumstances arise. However, the recent case of Seadrill v Tullow reminds us that it is … Continue reading Risky business: Offshore drilling and using force majeure as an exit route
A client recently called me in a panic. Their contractor had discovered a protected species of bird had set up home in the exact spot where they needed to carry out the next phase of works at one of their sites. No one on site was entirely confident on what the appropriate next steps should … Continue reading Beware – wildlife on site!
The TCC does not like blocking ongoing adjudications or interfering in their conduct. To date, it has only done so in a few unusual cases. Recently, however, it has found a good reason to prevent an adjudication from proceeding, which could be of very wide application.
Concurrent delay is something that the courts tell us is exceedingly rare. And yet, it is a subject which can occupy much time when parties are in dispute about entitlement to an extension of time. The Court of Appeal has now considered whether parties to a construction contract can decide how to apportion risk in … Continue reading Concurrent affairs: North Midland Building Ltd v Cyden Homes
Recent cases, including the Court of Appeal’s judgment in Bou-Simon v BGC Brokers LP and the (as yet unreported) case of Harrow LBC v Engie Regeneration (Apollo) Ltd (2018) (TCC), provide a useful reminder of the strict constraints on implying terms into a commercial contract. Courts can imply terms into a contract in order to … Continue reading What are you implying? The role of implied terms in contract interpretation
The trouble with collateral warranties (CWs) is that they aren’t very interesting. Construction lawyers typically overdose on them as trainees and have had enough of them by the time they qualify. A brief foray into the world of third party rights and they are ready to move on to higher things, leaving the following cohort … Continue reading Making collateral warranties interesting: the Office Depot case
1 October 2019 will see a significant shake-up of the VAT rules in the construction sector. New rules will come into force on that date which will, in many cases, require the recipient of the supply of construction services, rather than the supplier, to account for VAT on the supply. Large and small businesses making … Continue reading The reverse charge: shaking up VAT on construction services
Valuing a contractor’s work on a complex project is rarely an easy task. During the works, parties to a construction contract commonly devote significant resources to ensuring that the work is properly valued. These valuations are often carried out by people with close knowledge of the project, and under the NEC form of contract certified … Continue reading The costly business of ignoring interim assessments and agreed valuations: ICI v Merit Merrell Technology
Increasingly, the construction industry model that we know so well – based on layers of contractors and sub-contractors – is being called into question. In the last six months various failures (including Grenfell, Scottish PFI-built schools and Carillion’s collapse) have prompted questions about construction industry outsourcing and transfer of risk. Queries have been raised about … Continue reading Payment, retention and risk: shuffling the deck
The NEC contract is built on the spirit of mutual trust and co-operation. One area in which this plays out is in the context of applications for an extension of time or a change in the prices by a contractor. The project manager is required to assess these applications on a prospective or forecasted basis, … Continue reading Prospective analysis of compensation events under NEC: shutting one’s eyes and groping in the dark?
Increasingly, our clients are requesting that we incorporate provisions for modular building techniques into their construction contracts. There seems to be a real trend for including at least some aspects of “modular” into development and other projects. It is open to debate whether this is driven by improvements in design and adaptability of modular building … Continue reading The avalanche effect: key issues in modular building
Last year, I blogged on the first instance decision of the Scottish courts in SSE Generation Ltd v Hochtief Solutions AG and another. That decision has been overturned by the Inner House, Court of Session (the Scottish equivalent of the Court of Appeal) in an important judgment that sheds light on how the English courts might … Continue reading The fine line between design and implementation: scope of NEC Option X15
My colleague, Natalie Wardle, commented on the Supreme Court’s decision in Gard Marine and Energy Ltd v China National Chartering Company Ltd in her May 2017 blog. As she noted, the judgments (and the 3:2 majority verdict) left a number of questions unanswered. Two of these were: What is the strength of the implied term that … Continue reading Co-insurance and subrogation rights revisited (again!)
Recently, in the course of reviewing a proposed building contract for an employer, I had cause to consider how responsibility for obtaining planning consents had been addressed. Or rather, whether it had been addressed at all. Jean-François Clin v Walter Lilly & Co Ltd is a forceful reminder to effectively deal with this issue. The Court … Continue reading An unplanned surprise: Implied planning obligations – Clin v Walter Lilly
Coulson J’s decision in Grove Developments Ltd v S&T (UK) Ltd has triggered a great deal of commentary, including Jonathan Cope’s post, which I read with great interest. It got me thinking about what strategies an employer or contractor might adopt to counter a smash and grab adjudication, either pre-emptively or after the referral has landed.