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TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
UNIVERSITI TEKNOLOGI MALAYSIA
TIME AT LARGE AND REASONABLE TIME FOR COMPLETION
ONG RUI YING
A project report submitted in partial fulfillment of the
requirement for the award of the degree of
Master of Science (Construction Contract Management)
Faculty of Built Environment
Universiti Teknologi Malaysia
JUNE 2007
iii
Dedicated to my personal Lord and Saviour Jesus Christ
and to my beloved parents and siblings.
iv
ACKNOWLEDGEMENTS
First of all, I would like to express my gratitude to my supervisor, Assoc.
Prof. Dr Rosli Abdul Rashid for his guidance and advice in order to complete this
master project. A special thanks to all the lecturers for the course of Master of
Science (Construction Contract Management), for their patience and kind advice
during the process of completing the master project.
A debt of gratitude is owed to many individuals who have also given me
support, help and tolerance in writing and completing this master project. Not
forgetting my dearest parents and siblings for their unconditional love and support.
Lastly, I would like to express my thanks to my fellow course mates, who have in
their own way helped me a great deal throughout the preparation and production
stages of this master project. Care and concern from my house mates are also
greatly appreciated.
v
ABSTRACT
Time is an extremely important issue in construction. Timely completion of the
construction works by the contractor is of great importance to the employer.
Therefore, most construction contracts specify time for performance in achieving
completion of the works. However, during the execution of the contract,
circumstances may arise which render that completion date unenforceable. At
common law, the contractor’s obligation to complete the works by the specified date
is removed if the employer delays the contractor in the execution of the works. When
the specified completion date no longer applies, time is said to be “at large”, and the
contractor’s obligation is merely to complete the works within a reasonable time.
What does it mean by reasonable time? It is most certainly not “as and when the
contractor sees fit”. The study is aimed at determining the meaning of “reasonable
time” when time is at large. Findings of this study will assist contractors to assess a
reasonable time to complete the works when time at large occurs. The approach
adopted in this research is case law based. There are no limitations as for the court
cases referred to in this study in terms of type of projects as long as the case is
related to reasonable time. A total of ten cases centered on what is a reasonable time
were studied. Through the analysis of courts’ judgments, the meaning of “reasonable
time” when time at large occurs was determined. “Reasonable time” means
reasonable under the existing circumstances, assuming that those circumstances, in
so far as they involve delay, are not caused or attributed to by him and excluding
circumstances which were under the control of the contractor, considering what in
ordinary circumstances was a reasonable time for performance and then considering
to what extent the time for performance of the contractor was in fact extended by
extraordinary circumstances outside his control.
vi
ABSTRAK
Masa merupakan satu isu yang penting di dalam pembinaan. Kerja
pembinaan yang disiapkan oleh kontraktor tepat pada masanya adalah satu aspek
yang amat penting kepada majikan. Oleh itu, kebanyakan kontrak pembinaan
menetapkan masa untuk penyiapan kerja. Bagaimanapun, ketika perlaksanaan
kontrak, keadaan-keadaan yang tertentu mungkin timbul dan menyebabkan tarikh
penyiapan tidak boleh dikuatkuasakan. Di dalam ‘common law’ kewajipan
kontraktor untuk menyiapkan kerja pada masa yang ditetapkan akan dibatalkan
sekiranya majikan melambatkan kontraktor dalam perlaksanaan kerja. Apabila masa
penyiapan kerja yang ditetapkan tidak dapat dikuatkuasakan lagi, situasi ‘time at
large’ akan berlaku dan tanggungjawab kontraktor hanyalah menyiapkan kerja dalam
masa yang wajar. Apakah makna masa yang wajar? Pastilah bukan “sebagaimana
dan apabila kontraktor rasa sesuai”. Kajian ini adalah untuk menentukan makna
“masa yang wajar” apabila keadaan ‘time at large’ berlaku. Dapatan kajian ini akan
membantu kontraktor untuk menilai apakah masa yang wajar untuk penyiapan kerja
apabila situasi ini berlaku. Pendekatan yang digunakan dalam kajian ini adalah
berdasarkan kes undang-undang. Kes mahkamah yang dirujuk di dalam kajian ini
tidak dibataskan dari segi jenis projek, asalkan kes-kes tersebut berkaitan dengan
masa yang wajar. Sebanyak sepuluh kes yang berkaitan dengan masa yang wajar
telah dikaji. Melalui analisis keputusan mahkamah, makna “masa yang wajar” dapat
ditentukan. “Masa yang wajar” bermakna wajar di bawah keadaan yang wujud,
mengandaikan bahawa keadaan yang berkaitan dengan kelewatan tersebut bukan
disebabkan olehnya dan tidak termasuk keadaan yang di bawah kawalan kontraktor,
mempertimbangkan apa yang di bawah keadaan biasa merupakan masa yang wajar
untuk penyiapan kerja dan seterusnya mempertimbangkan sejauh mana masa untuk
menyiapkan kerja adalah dilengahkan oleh keadaan luar biasa di luar kawalannya.
vii
TABLE OF CONTENTS
CHAPTER TITLE PAGE
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF TABLES x
LIST OF CASES xi
LIST OF ABBREVIATIONS xv
1.0 INTRODUCTION
1.1 Background Studies 1
1.2 Problem Statement 5
1.3 Objective of the Research 6
1.4 Scope of the Research 6
1.5 Significance of the Research 7
1.6 Research Methodology 7
viii
2.0 TIME AT LARGE
2.1 Introduction 9
2.2 Standard Form Provisions 10
2.2.1 Public Works Department (P.W.D)
Form 203A (Rev. 10/83) 10
2.2.2 Pertubuhan Arkitek Malaysia (PAM)
(2nd Edition, 1998) 12
2.2.3 Federation Internationale des Ingenieurs
Conseils (FIDIC) Construction Contract (1999) 14
2.3 Time for Completion 15
2.3.1 Time of the Essence 16
2.4 Damages for Late Completion 19
2.4.1 Liquidated Damages 20
2.5 Extension of Time 22
2.5.1 Purposes of Extension Provisions 22
2.5.2 Grounds for Extension of Time 24
2.5.2.1 Force Majeure 24
2.5.2.2 Variations and Extra Works 26
2.5.2.3 Exceptionally Adverse Weather
Conditions 27
2.5.2.4 Late Possession of Site 28
2.5.2.5 Sub-contractors 29
2.5.2.6 Delay in Approvals and Instructions 29
2.5.2.7 Other Commonly Stipulated Grounds 30
2.5.2.8 Causes beyond the Contractor’s Control 31
2.6 Time at Large 31
2.6.1 Events Giving Rise to Time at Large 32
2.6.1.1 No Time or Date Fixed in the Contract 35
2.6.1.2 Time or Date Ceases to Apply by Acts
of Prevention 36
2.6.1.3 Waiver 43
2.6.1.4 Failure of Contractual Machinery 44
2.7 Conclusion 45
ix
3.0 REASONABLE TIME
3.1 Introduction 47
3.2 Reasonable Time 49
3.3 Statutory Provisions that Apply the term
“Reasonable Time” 54
3.3.1 Sale of Goods Act 1957 (Revised 1989) 54
3.3.2 Supply of Goods and Services Act 1982 (UK) 55
3.3.3 International Sales 56
3.4 Conclusion 57
4.0 REASONABLE TIME WHEN TIME IS AT LARGE
4.1 Introduction 59
4.2 Reasonable Time when Time is at Large 60
4.2.1 Reasonable Time Where No Time for
Completion is specified in the Contract/
Contract is Silent as to Time 60
4.2.2 Reasonable Time where the Stipulated Date
Has ceased to be Applicable by Reason of
Prevention or Breach 68
4.3 Conclusion 78
5.0 CONCLUSION AND RECOMMENDATIONS
5.1 Introduction 80
5.2 Summary of Research Findings 80
5.3 Problems Encountered during Research 82
5.4 Conclusion 82
REFERENCE 83
BIBLIOGRAPHY 85
x
LIST OF TABLES
TABLE NO TITLE PAGE
4.1 Reasonable time where no time for completion is specified
in the contract/contract is silent as to time 73
4.2 Reasonable time where the stipulated date has ceased to be
applicable by reason of prevention or breach 76
xi
LIST OF CASES
CASES PAGE
A Bell & Son (Paddington) Ltd v CBF Residential Care and
Housing Association. (1989) 46 BLR 105
11
Abdul Rahim bin Syed Mohd v Ramakrishnan Kandasamy &
Anor. [1996] 3 MLJ 385, HC
17
Afovos Shipping Co v Pagnan [1983] 1 WLR 195 at 201 (HL) 10
Amalgamated Building Contractors Ltd v Waltham Holy Cross
Urban District Council [1952] 2All ER452 at 452 (CA).
36
Amherst v James Walker [1983] Ch 305 at 315 (CA) 48
Arab Malaysian Corpn Builders Sdn Bhd v ASM Development
Sdn Bhd. [1998] 6 MLJ 136
20
Astea (UK) Limited v Time Group Limited [2003] EWHC 725
(TCC)
43
Attwood v Emery (1856), 1 CB (NS) 110; 26 LJCP 73 54
Ayadurai v Lim Hye [1959] MLJ 143 17
Balfour Beatty Building Ltd v Chestermount Properties Ltd 62
Build LR 1
45
Barque Quilpue Ltd v Bryant (1904) 36
Bernhard’s Rugby Landscapes Ltd v Stockley Park
Consortium (No 2) [1998]
44
BFI Group of Companies Ltd v DCB Integration Systems Ltd
[1987] CILL 328
11
Bilton v Greater London Council (1982) 20 BLR 1, HL 23, 42
xii
CASES PAGE
British and Commonwealth Holdings plc v Quadrex Holdings Inc.
[1989] QB 842; [1989] 3 All ER 492, CA
16
British Steel Corporation v Cleveland Bridge & Engineering Co
Ltd [1984] 1 All ER 504, 24 Build LR 94.
64
Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd
(1989) 51 BLR 16
2
CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors
[2001] HKCU 916
69
Chaffer and Tassie v Richards (1905) 26 NLR 20. 27
Charles Rickards Ltd v Oppenheim [1950] 1 KB 616. 43
Charnock v Liverpool Corporation [1968] 1 WLR 1498 (CA) 48
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd
[1989] 1 MLJ 308, HC.
18
Dodd v Churton [1897] 1 QB 562 (CA). 42
Earth & General Contractors Ltd v Manchester Corporation
(1958) 108 LJ 665
28
Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd
[1955] 1 Lloyd’s Rep. 303
69
Fairclough v Rhuddlan Borough Council (1985). 29
Felton v Wharrie (1906) 28
Fisher v Ford (1840), 12 Ad. & El. 654 59
Ganam d/o Rajamany v Somoo s/o Sinnah [1984] 2 MLJ 290. 18
Gaymark Investments Pty Ltd v Walter Construction Group
(1999) NTSC 143, (1999) 16 BCL 449; (2005) 21 Const LJ 70
33
Greater London Corporation v Cleveland Bridge and
Engineering (1984) 34 BLR 57
48
Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd
[1999] 1 MLJ 65.
19
Holme v Guppy (1838) 3 M&W 387 4, 22, 28, 36
Hydraulic Engineering Co Ltd v McHaffie, Goslett & Co.
(1878) 4 QBD 670
52, 54
Ismail bin Haji Embong v Lau Kong Han [1970] 2 MLJ 213 17
xiii
CASES PAGE
J and J Fee Ltd v The Express Lift Company Ltd
[1993] 34 ConLR 147.
36
Jamshed Khodaram Irani v Burjorni Dunjibhai
(1915) LR 43 IA 26
17
Kenny and Hingles’ Trustee v Union Government (1928) TD 272 27
Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12 17
LeBaupin v Crispin [1920] 2 KB 714. 25
Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89 21
Lombard plc v Butterworth [1987] Q.B. 27 at 535 (C.A.) 20
Lyle Shipping Co. v Cardiff Corporation [1900] 2 QB 638 54
Maniam v The State of Perak [1975] MLJ 75 21
Meyer v Gilmer (1899) 18 NZLR 129 42
Mohamed Habidullah v Bird & Co. AIR 1922 PC 178 17
Murdoch v Lockie (1897) 15 NZLR 296 42
Neodox Ltd v Swinton and Pendlebury Borough Council (1958) 5
BLR 34
53
North West Metropolitan Regional Hospital Board v Bickerton
(1970)
29
Panamena Europea Navigacion (Compania Limitada) v
Frederick Leyland & Co Ltd [1947] AC 428 (HL).
32, 45
Pantland Hick v Raymond & Reid [1893] AC 22. 60
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd
(1970) 1 BLR 111
13, 29, 39
Percy Bilton v Greater London Council [1982] 1 WLR 794 29, 38
Raineri v Miles [1981] AC 1050 (HL) 48
Rapid Building Group v Ealing Family Housing Association Ltd
(1984) 29 BLR 5
4, 13, 22, 28, 39
Rickards v Oppenheim [1950] 1 KB 616 69
Russell v Viscount Sa da Bandeira (1862) 13 CB (NS) 149 42
Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. 17, 21
Sims & Co. v Midland Railway Co. [1913] 1 KB 103 63
xiv
CASES PAGE
Shawton Engineering Ltd v DGP International Ltd
[2005] EWCA Civ 1359.
70
SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391;
(1984) 1 Const LJ 159
36, 42
Startup v Macdonald (1843), 6 Man. & G. 593 59
Tan Ah Kian v Haji Hasnan [1962] MLJ 400, HC;
[1963] MLJ 175, FC.
18
Taylor v The Great Northern Railway Company [LR] 1 CP 385. 62
Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30 12
Tew v Newbold-on Avon School Board (1884) 1 C&E 260 42
Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd
[1993] 3 MLJ 25
21
The Lyle Shipping Company Ltd v The Corporation of Cardiff
[1900] 2 QB 638.
62
Thornhill v Neats (1860) 8 CB (ns) 149 42
Trollope & Colls Ltd v NW Metropolitan Regional Hospital
[1973] 1 WLR 601 (HL)
42
United Scientific Holdings Ltd v Burnley Borough Council
[1977] 2 All ER 62, HL, [1978] AC 1050 (HL)
3, 16
Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118 17, 18
Walter Lawrence v Commercial Union Properties
(1984) 4 ConLR 37.
27
Wells v Army and Navy Cooperative Society (1902) 86 LT 764 41
Westwood v Secretary of State for India (1863) 7 LT 736 42
xv
LIST OF ABBREVIATIONS
AC Law Reports Appeal Case
All ER All England Law Reports
ALJ Australian Law Journal
ALR Australian Law Reports
ALJR Australian Law Journal Reports
App Cas Appeal Cases
B Beavan
B & S Best and Smith’s Reports
Build LR Building Law Reports
CA Court of Appeal
CB Common Bench Reports
Ch Chancery
Ch App Chancery Appeal
Ch D The Law Reports, Chancery Division
CIDB Construction Industry Development Board
CLD Construction Law Digest
DC Divisional Court, England
Const LJ Construction Law Journal
Const LR Construction Law Reports
CP Law Reports, Common Pleas
CPD Law Reports, Common Pleas Division
DLR Dominion Law Reports
Exch Exchequer Reports
Eq Equity Case
EWHC High Court of England anf Wales Decisions
xvi
FC Federal Court
F & F Foster & Finlayson’s Reports
H & N Hurlstone & Norman’s Exchequer Reports
HL House of Lords
HKC Hong Kong Cases
HKLR Hong Kong Law Reports
IR Irish Reports
JKR Jabatan Kerja Raya
KB King Bench
LGR Local Government Reports
LJKB (QB) Law Journal Reports, King’s (Queen’s) Bench
Lloyd’s Rep Lloyd’s List Reports
LR Law Reports
LT Law Times Reports
JP Justice of the Peace / Justice of the Peace Reports
MLJ Malayan Law Journal
NZLR New Zealand Law Reports
PAM Pertubuhan Arkitek Malaysia
PWD Public Work Department
PD Probate, Divorce and Admiralty Division of High Court
QB Queen Bench
TCC Technology and Construction Court
SLR Singapore Law Reports
WLR Weekly Law Reports
WR Weekly Reports
CHAPTER 1
INTRODUCTION
1.1 Background Studies
Time is an extremely important issue in construction. Together with cost and
quality, it is a primary objective of project management, and a major criterion by
which the success of a project is judged. The scope of this subject includes three
basic time-related issues which are commencement, progress and completion
(Murdoch and Hughes, 2000). This may be seen from clause 21.1 of PAM 98:
On the Date of Commencement stated in the Appendix, possession of
the site shall be given to the Contractor who shall thereupon begin the
Works, and regularly and diligently proceed with the same and
complete the same on or before the Date for Completion stated in the
Appendix subject to any extension of time in accordance with Clause
23.0 and/or sub-clause 32.1(iii).
clause 38(b) of PWD 203A which states:
2
Unless the Contract Documents shall otherwise provide, possession of
the Site as complete as may reasonably be possible but not so as to
constitute a tenancy, shall be given on or before the “Date of
Possession” stated in the Letter of Acceptance of Tender to the
Contractor who shall thereupon and forthwith commence the Works
(but subject to sub-clause (a) hereof) and regularly and diligently
proceed with and complete the Works on or before the Date of
Completion as stated in the Appendix.
and clause 23.1 of JCT 98, which states:
On the Date of Possession possession of the site shall be given to the
contractor who shall thereupon begin the Works, regularly and
diligently proceed with the same and shall complete the same on or
before the Completion Date.
Contracts of all kinds commonly specify a date for the performance of some
obligation (Wallace, 1995). Where it comes to building contracts, stipulated periods
are provided within which the buildings have to be delivered became an essential
condition of the agreement (Guest, 1975). It is usual to name the date by which
completion is required, as can be seen in Clause 39 of PWD 203A. Even where no
precise date has been included in the contract itself, a court may be persuaded to
imply a term for completion by a certain date, on the ground that the parties must
have intended this, as seen in Bruno Zornow (Builders) Ltd v Beechcroft
Developments Ltd1 . The contractor’s obligation to complete the works by the
completion date is, like all such obligations, backed up by legal sanctions. Under
certain types of contract (for example contracts for the sale of perishable goods), time
is expressly or impliedly “of the essence”. Consequently, the employer’s remedy for
any lateness in performance or completion will be an award for damages for breach of
contract (Murdoch and Hughes, 2000).
1 (1989) 51 BLR 16.
3
Under what circumstances can time be held to be of the essence of a contract?
According to Chow (2004), in United Scientific Holdings Ltd v Burnley Borough
Council2, the House of Lords, citing with approval a statement on the position in
Halsbury’s Laws of England (4th Ed), ruled that time should not be held to be of the
essence unless the following conditions are present:
1. The parties must have expressly stipulated in the contract that conditions as to
time should be strictly complied with
2. The nature of the subject-matter of the contract and the surrounding
circumstances demonstrate that time should be considered to be of the essence
3. The party who has been subjected to unreasonable delay gives notice to the
party in default making time of the essence
Section 56 (3) of Contract Act 1950 states the effect of acceptance of
performance at time other than agreed (the completion date which is also the essence
of the contract) upon, which reads:
If, in case of a contract voidable on account of the promisor’s failure
to perform his promise at the time agreed, the promisee accepts
performance of the promise at any time other than that agreed, the
promisee cannot claim compensation for any loss occasioned by the
non-performance of the promise at the time agreed, unless, at the time
of the acceptance, he gives notice to the promisor of his intention to
do so.
The position in the rules contained in section 56 (3) of the Contracts Act 1950
is that: if in a contract in which time is of the essence, a party fails to perform it by
the stipulated time, the innocent party has the right either to rescind the contract, or
to treat it as still subsisting. If he treats it either expressly or by conduct as still 2 [1977] 2 All ER 62, HL, [1978] AC 1050 (HL),
4
continuing, the contract exists but time ceases to be of the essence and become at
large. Consequently he cannot claim liquidated damages under the contract unless
there is a provision as to the extension of time. However, this cessation can be
revived and so time can be restored to be the essence by the innocent party serving a
notice to the party in default giving a new date of completion. If this is done, there
would be a date from which liquidated damages could be calculated (Sinnadurai,
1987).
At common law, the contractor’s obligation to complete the works by the
specified date is removed if the employer delays the contractor in the execution of
the works. When the specified completion date no longer applies, time is said to be
“at large”, and the contractor’s obligation is merely to complete the works within a
reasonable time. A fundamental point is that the time for completion can only be
extended where the contract permits, and strictly in accordance with the contract
provisions (Murdoch and Hughes, 2000). It is a common belief in the construction
industry that extensions of time are solely for the benefit of the contractor. At face
value by giving the contractor more time to complete the works and by reducing his
liability for liquidated damages they do appear to be one-sided. It is not the
contractor who has most need of extension of time provisions, it is the employer. A
string of well documented cases from Holme v Guppy3 to Rapid Building v Ealing4
confirm that the courts will not uphold liquidated damages where the employer has
prevented completion on time unless there is express provision in the contract to
extend time for the employer’s default (Eggleston, 1992).
The ultimate dispute on a construction contract is for an employer to assert
that time is of the essence and to determine without paying whilst the contractor is
claiming time to be at large and determining for non-payment (Eggleston, 1992).
3 (1838) 3 M&W 387. 4 (1984) 29 BLR 5.
5
Problem also arises in the wording employed by many of the standard forms
of contract as there was a shortcoming in that some of them did not fully cater in the
extension of time clause for all delays caused by the employer. General sweep-up
wording in an extension of time clause (such as “or other unavoidable
circumstances”) has been held by the English courts not to cover employer defaults.
Similarly in Malaysia, only PAM 98 Clause 23.7(xi) allows the Architect to grant an
extension of time for “any act of prevention or breach of contract by the Employer.”
This is designed to be a “catch-all” provision so that time does not inadvertently
become at large. Other forms like IEM, PWD 203A and CIDB do not have such
similar provision (Martin, 2005). Thus, time will be at large when the employer
causes delay to the contractor e.g. by ordering extra work and there is no provision
for extension of time for the contractor.
1.2 Problem Statement
The phrase “time at large” is much loved by contractors, the suggestion that
the contractor has as much time as he wants to finish the works. This is not what it
means. Time becomes at large when the obligation to complete within the specified
time for completion of a contract is lost. The obligation then becomes to complete
within a reasonable time. It is most certainly not “as and when the contractor sees
fit”. The question then is what is a reasonable time? What is generally at stake in the
matter of whether or not time is at large is the employer’s right to deduct liquidated
damages for late completion. The right is lost completely if time becomes at large –
the employer can still sue for general or unliquidated damages for late completion –
but regard will then had to be the contractor’s entitlement to a reasonable time
(Eggleston, 1992).
6
Time being “at large” does not mean that the Contractor has no obligation to
complete the work. He has to complete in a “reasonable time”. What is reasonable
will depend on all the circumstances at the time (Murdoch and Hughes, 1992).
Calculating a reasonable time is not an easy matter and, as Emden’s Building
Contracts, puts it:
When a reasonable time for completion becomes substituted for a
time specified in the contract ….then in order to ascertain what
reasonable time is, the whole circumstances must be taken into
consideration and not merely those existing at the time of the making
of the contract.
1.3 Objective of the Research
The objective of this study is to determine the meaning of “reasonable time”
when time is at large.
1.4 Scope of the Research
The approach adopted in this research is case law based. There are no
limitations as for the court cases referred to in this study in terms of type of projects
as long as the case is related to time at large and reasonable time. The standard
forms of contract that will be referred to are:
1. Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
7
2. Public Works Department (P.W.D) Form 203A (Rev. 10/83)
3. Construction Industry Development Board (CIDB) Standard Form of
Contract for Building Works (2000 Edition)
4. International Federation of Consulting Engineers / Federation
Internationale des Ingenieurs Conseils (FIDIC) Construction Contract
(1999)
1.5 Significance of the Research
This research should give a review to contractor and employer as to what is
time at large and when does it apply. When the parties in the industry are equipped
with the knowledge of time at large and its implications on both contractor and
employer, this situation can be avoided as much as possible. Suggestion on what is a
reasonable time to complete the works in the event of time at large is also provided
for through this research.
1.6 Research Methodology
This research involved literature review on time-related matters in the
construction industry. Initial study will be carried out involving extensive reading
and understanding of the concepts involved.
Then data and information collecting will be carried out. Primary source will
be law cases found in Malayan Law Journal through the access of Lexis Nexis
8
available in the university’s online database. Secondary sources such as articles,
journals, textbooks and related websites will also be studied and referred to in the
course of the whole research.
Analysis will be done on collected information and will be arranged in an
orderly manner. Finally, writing up will be carried out, followed by checking and
correction of writing.
CHAPTER 2
TIME AT LARGE
2.1 Introduction
Most construction contracts specify time for performance in achieving
completion of the whole of the works and many have additional requirements for
phased or sectional handovers. Time may be fixed either by reference to specified
dates or by reference to a construction period. If the latter method is used it is
essential that a precise completion date can be established. This means that there
must be an identifiable commencement date from which time runs and there must be
no uncertainty on whether the construction period takes in or excludes holiday
periods. These may seem obvious matters but it is extraordinary how often in
construction industry disputes it is found that the intentions of the parties in respect
of time have not been clearly expressed or have been misapplied. (Eggleston, 1992).
Similarly, according to Chow (2004), a date is fixed from which the time for
completion begins to run. Frequently, this is the date on which the contractor takes
possession of the site, but this is by no means the rule. In large and elaborate
10
projects, it is not always possible for the owner to afford the contractor
unencumbered possession of the whole site and it is quite common in these situations
for the contract to provide that time for completion begins to run from some
stipulated date in lieu of the date of site possession. As an alternative to stipulating
the period within which the works have to be completed, a contract may provide that
the contractor’s obligation is to complete the works on or before a particular date.
Thus, instead of stipulating that the works shall be completed within 24 months from
1 January 2003, a construction contract may merely provide that the works shall be
completed on or before 31 December 2004. In this case, the contractor has the whole
of the period up to the end of the stipulated day of completion to perform his
obligation.5
2.2 Standard Form Provisions
Construction contracts usually contain elaborate provisions stipulating the
time within which the contractor is required to complete the construction of the
works, as well as the conditions under which such time may be extended. Standard
form provisions related to commencement and completion of works, damages for
non-completion and extension of time is looked into.
2.2.1 Public Works Department (P.W.D) Form 203A (Rev. 10/83)
Subject to any requirement for completion in parts or sections in the Contract,
clause 39(a) basically reiterates the obligation of the Contractor to complete the
5 Afovos Shipping Co v Pagnan [1983] 1 WLR 195 at 201 (HL).
11
whole of the Works by the Date for Completion as stated in the Appendix or such
extended time as granted by the Superintending Officer (Lim, 2004).
Clause 40 provides the machinery whereby the Government and the
Contractor can agree in advance the damages to be payable by the Contractor if the
Contractor fails to complete by the Date for Completion or within any extended time
granted by the Superintending Officer. This agreed damages expressed as
Liquidated and Ascertained Damages is provided in the Contract to negate the
necessity of the Government having to prove the actual loss suffered in the event of
the Contractor’s breach for delayed completion.6 In other words, it is designed to
allow the Government to sue for or deduct the Liquidated and ascertained Damages
simpliciter from the money due to the Contractor. The enforceability of this
provision is subject to section 75 of the Contracts Act 1950 which reads:
When a contract is broken, if a sum is named in the contract as to the
amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is proved to
have been caused thereby, to receive from the other party who has
broken the contract reasonable compensation not exceeding the
amount so named or, as the case may be, the penalty stipulated for.
Lim (2004) also noted that although not specifically stated in clause 40, it is
implicit that the Superintending Officer should only issue the Certificate of Non-
completion after he has fully evaluated and granted the appropriate extension of time
(if any) to the Contractor pursuant to clause 43.7 In addition, it is essential that the
rate for Liquidated and Ascertained Damages is clearly inserted in the Appendix.
The clause is not enforceable and no amount can be recovered by the Government if
6 See BFI Group of Companies Ltd v DCB Integration Systems Ltd [1987] CILL 328. 7 See A Bell & Son (Paddington) Ltd v CBF Residential Care and Housing Association (1989) 46 BLR 105. If a new completion date is fixed and the contractor has not completed by that date, it is implicit that a non completion certificate to that effect must be issued by the architect whether or not a certificate had been issued in relation to an earlier and superseded completion date.
12
it is omitted. In this case, the Government would have to resort to claim general
damages against the Contractor for delayed completion. However, if “NIL” is
inserted as the rate, it would be construed to constitute an agreement by the parties
that no damages would be payable by the Contractor and the Government would be
precluded from even claiming general damages against the Contractor for delayed
completion.8
Clause 43 provides for the Superintending Officer to grant an extension of
time on specified grounds and an extension of time is grantable on those grounds and
no other. The Superintending Officer has no inherent power to extend the time for
completion and in the absence of an express provision such as this clause he would
have no power to do so. This clause is an improvement over the extension of time
clause in the PAM (1969 edition) form of contract which contained limited grounds
for extending time and did not cover many common delaying events, such as failure
to give possession of site on the due date.
2.2.2 Pertubuhan Arkitek Malaysia (PAM) (2nd Edition, 1998)
According to Rajoo (1999), clause 21 of PAM 1998 Form is one of the most
important clauses in the contract. It provides for the employer to give site possession
in whole or parts by appropriately designating the Date of Commencement or Dates
of Commencement. This enables the contractor to be given site possession in one go
or alternatively by defined sections based on the needs of the employer. The
contractor’s primary obligation is to complete the Works by the contractual date for
completion. As his secondary obligation, the contractor is then to begin the Works
and proceed ‘regularly and diligently’ so as to complete the Works ‘on or before’ the
completion date set out in the Appendix of the PAM1998 Form.9 He has the whole
8 Temloc Ltd v Enrill Properties Ltd (1987) 39 BLR 30. 9 Clauses 21.1 and 21.2 of the PAM Contract.
13
period between the Dates of Commencement and Completion to carry out and
complete the Works in a manner he considers best.10 The Dates of Commencement
and Completion must be specified in the Appendix and, subject to the grant of any
extension of time under clauses 23 or 32.1(iii) of the PAM 1998 Form (the latter
clause permits an extension of time for reinstatement of war damage), the contractor
is bound to complete the work by the specified Date for Completion. Clauses 21.2
and 21.3 go on to cure the inadequacy of the PAM 1969 Form in dealing with
commencement and completion in phases. If the employer requires the work to be
completed in parts, these two clauses set out the mechanics of how the contractor can
be obligated to complete the Works in part. Clause 21.4 empowers the architect to
issue instructions requiring the postponement of any work to be executed under the
contract. The employer or the architect may be forced by circumstances to call for
delay in the whole or part of the Works. Without this express power, the architect
would have no power to control the contractor’s order of working.
Clause 22 on damages for non-completion provides machinery whereby the
parties can agree in advance the damages payable by the contractor and recoverable
by the employer if he fails to complete the Works by the Date/s for Completion
stated in the Appendix, or within any extended period certified by the Architect
under clauses 23 or 32.1 (iii). Both liquidated damages and extension of time clauses
will be construed strictly contra proferentem against employer if there is any doubt
as to the construction of the provision11 (Rajoo, 1999).
Clause 23 on extension of time of the PAM 1998 Form is aimed at allocating
the risks of non-completion between the parties. It reduces the contractor’s risk in
relation to delays by entitling him to an extension of time for practical completion on
account of delay based on various circumstances, putting back the date on which
liquidated damages will start to apply. It is the main provision under which any
alteration to the Date for Completion can be made and refers to an extension of time
10 Supra note 4. 11 See Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111.
14
meaning a lengthening of the period within which the Works have to be completed
(Rajoo, 1999).
2.2.3 Federation Internationale des Ingenieurs Conseils (FIDIC) Construction
Contract (1999)
Clause 8 of the FIDIC Construction Contract includes provisions for
commencement and completion of works, delay damages and extension of time, all
in one clause. The engineer shall give the Contractor not less than 7 days’ notice of
the Commencement Date. Unless otherwise stated in the Particular Conditions, the
Commencement Date shall be within 42 days after the Contractor receives the Letter
of Acceptance.12 The Contractor then has the obligation to complete the whole of the
Works and each Section, if any, within the Time for Completion including achieving
the passing of the Tests on Completion and completing all work which is stated in
the Contract as being required for the Works or Section to be considered to be
completed.13
If the Contractor fails to comply with the Time for Completion, the
Contractor is subject to pay delay damages to the Employer for this default. These
delay damages shall be the sum stated in the Appendix to Tender, and payment is
provided to be made on daily basis. However, the total amount due cannot exceed
the maximum amount of delay damages (if any) stated in the Appendix to Tender.
The delay damages do not relieve the Contractor from his obligation to complete the
Works, or from any other duties, obligations or responsibilities which he may have
under the contract.14
12 Clause 8.1 of the FIDIC Form. 13 Clauses 8.2(a) and 8.2(b) of the FIDIC Form. 14 Clause 8.7 of the FIDIC Form.
15
FIDIC Form has a provision in clause 19 which elaborates on force majeure,
such as the definition of force majeure, notice of force majeure, its consequences and
release from performance under the law. Such a provision is not found in other
standard forms of building contract such as PWD 203A, PAM 1998 and CIDB 2000.
2.3 Time for Completion
According to Eggleston (1992), building forms usually specify a date for
completion in the appendix whereas civil engineering forms usually specify a time
for completion. The date for completion is therefore calculated from a date for
commencement given by the engineer. In both cases, procedural variations are often
introduced and the objective of establishing a precise date for completion can be lost.
For example, tenderers are commonly allowed to give their own preferred times for
completion or to offer an alternative to that specified in the tender documents.
However, if the contractor is allowed to fix his own time, it is necessary that this
time is linked in the contract documentation to either a start date or a completion
date. Without one or the other there will be no firm date for completion. Similar
problems in fixing the date for completion with certainty can arise when extensions
of time are granted. Differences of approach in various standard forms of contract
may be in part responsible. The danger of granting periods of time instead of fixing
new dates is that uncertainty can be created as to whether such periods, particularly
where they are expressed in days, cover working days only or include weekends and
holidays.
16
2.3.1 Time of the Essence
Section 56(1) of the Contracts Act provides that failure to perform within a
fixed time in a contract, where time is essential, would render the contract voidable.
When time is of the essence in a contract, failure to complete by the specified date is
a breach of a condition entitling the innocent party to treat the contract as repudiated.
If the contract is a supply contract and the goods are offered late, acceptance of the
goods can be refused. If the contract is a construction contract and the contractor
fails to finish on time, the employer is entitled to dismiss the contractor from the site
and has no liability for payment for the unfinished work. However, this is not the
usual position in a construction contract. Finishing late does not normally entitle the
employer to dismiss the contractor from the site; it is a breach of warranty and
damages are the employer’s remedy. Nor does finishing late normally excuse the
employer from payment for unfinished work. The question then is what governs
whether or not time is of the essence in contracts. (Eggleston, 1992).
Sinnadurai (2003) noted as well that difficulties remain in determining when
time would be regarded as of the essence of the contract. At common law, time was
always regarded as of the essence of the contract in the sale of land. However,
equity did not take such a strict view. This attitude of equity towards time, did not
apply in cases when the parties had expressly agreed that time should be of the
essence. The exceptions to the common law rule that ‘time is always of the essence
of the contract’ were discussed by the House of Lords in United Scientific Holdings v
Burnley Borough Council15 and by the Court of Appeal in British and
Commonwealth Holdings plc v Quadrex Holdings Inc.16 The common law rule has
been assimilated by equity so that a court will examine the whole scope of the
transaction to decide whether the parties really meant the time stipulated to be of the
essence of the contract. Section 56 of the Contracts Act appears to follow the
English law whereby the rules contained in the section are not different from the
15 Supra note 2. 16 [1989] QB 842; [1989] 3 All ER 492, CA.
17
position arrived at in common law.17 Section 56 is the most invoked provision of the
Contracts Act dealing with time and the scope of this section has been considered in
a number of cases.18 The position is if in a contract in which time is of the essence, a
party fails to perform it by the stipulated time, the innocent party has the right either
to rescind the contract, or to treat is as still subsisting. If he treats it either expressly
or by conduct as still continuing, the contract exists but time ceases to be of the
essence and becomes at large. Consequently he cannot claim the liquidated damages
under the contract unless there is a provision as to the extension of time. However,
this cessation can be revived and so time can be restored to be of the essence by the
innocent party serving a notice to the party in default giving a new date of
completion.19
The law relating to time for performance under the Contracts Act was dealt
with exhaustively by Visu Sinnadurai J in Abdul Rahim bin Syed Mohd v
Ramakrishnan Kandasamy & Anor.20 Time, in a contract for the sale of land, is of
the essence in two main situations; firstly where the intention of the parties was such
that the time was of the essence of the contract for the fulfillment of their respective
obligations and secondly, where the nature of the subject matter or the surrounding
circumstances are such that the time specified for the performance is of the essence.
There is little difficulty in considering whether time is of the essence of a contract if
there is an express provision in the contract itself stating that it is so. In contracts
where the phrase ‘time is of the essence’ is employed, it is generally accepted that
the parties in these cases have clearly intended that the provision dealing with time is
an essential term of the contract. In such cases, both parties must perform their
respective obligations within the time stipulated. Where there is no express
provision in the contract making time of the essence, the courts will then have to
consider the nature of the property, the surrounding circumstances and the nature of
the contract to determine whether time was intended by the parties to be the essence 17 Yeoh Kim Pong Realty Ltd v Ng Kim Pong [1962] MLJ 118. See also Jamshed Khodaram Irani v Burjorni Dunjibhai (1915) LR 43 IA 26 (section 55 of the Indian Contract Act is similar to section 56 of the Malaysian Act). 18 See Lai Yew Seong v Wong Chieu Gook (1913) 1 FMSLR 12; Ismail bin Haji Embong v Lau Kong Han [1970] 2 MLJ 213; Ayadurai v Lim Hye [1959] MLJ 143. See also the Privy Council decision of Mohamed Habidullah v Bird & Co. AIR 1922 PC 178. 19 Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151. 20 [1996] 3 MLJ 385, HC.
18
of the contract. In Yeoh Kim Pong Realty Ltd v Ng Kim Pong21 time was not
expressly stated to be of the essence. It was held that considering the intention of the
parties, and on an ‘examination amongst other things of attendant circumstances’,
time was of the essence of the contract in question. It was also pointed out by the
judge, as seen in the case of Ganam d/o Rajamany v Somoo s/o Sinnah22 that the
mere stipulation of a date fixed for completion in a contract does not, by itself, make
time to be of the essence of the contract. The nature of the property and the
surrounding circumstances would still have to be considered in such cases.
The general principles regarding time were also spelt out by Gill J in the case
of Tan Ah Kian v Haji Hasnan.23 There are three situations whereby time is of the
essence of the contract: (i) where the parties have expressly stipulated in the contract
that it shall be so; (ii) where it was not originally stated to be but had been made so
by giving reasonable notice to the other, who had failed to perform the contract with
sufficient promptitude; and (iii) where from the nature of the contract or of its subject
matter, time must be taken to be of the essence of the agreement.
In building contracts, time of the essence of the contract is an interesting
stipulation encountered frequently. This stipulation is usually inserted by quantity
surveyors or engineers in the preliminaries section of the bill of quantities or in some
portion of the contract specification. There are occasions where such stipulations in
a contract document are intended to be literally construed. Thus, in a contract to
construct facilities for a particular event such as a games village for a major sports
event, it is clear that the owner will be left with very benefit if the project is delivered
after the dates set for the games. (Chow, 2004).
Chye Fook & Anor v Teh Teng Seng Realty Sdn Bhd24 is a case dealing with
late completion of a building, where time was of the essence of the contract. The
21 [1962] MLJ 118. 22 [1984] 2 MLJ 290. 23 [1962] MLJ 400, HC; [1963] MLJ 175, FC. 24 [1989] 1 MLJ 308, HC.
19
specific question before the High Court was whether the purchaser ‘could sue for
rescission on the agreement [that] … as the house was not completed … [on] the
completion date’. In a detailed judgment, Abdul Malek J dealt with relevant case
law and statutory law on the subject, particularly, sections 56 and 76 of the Contracts
Act. In Hock Huat Iron Foundry v Naga Tembaga Sdn Bhd25 the Court of Appeal
also considered the subject in relation to the provisions of Contracts Act 1950. The
position, as a result of the operation of section 56(1) of this Act and as set out in the
earlier decision of Loke Yuen Cheng & Anor v Vintex Sdn Bhd26, is that where the
parties to a contract clearly intends that time is to be of the essence of the contract,
then the occurrence of any delay in performance would render the contract voidable
at the option of the innocent party. If the innocent party elects to exercise the option,
the effect is that the contract is annulled so that the situation is as though it had never
existed. In the circumstances, the employer forfeits whatever recourse under the
contract, including an action for damages, and can only seek redress through
restitution.
2.4 Damages for Late Completion
The contractor’s obligation to complete the works by the completion date is
backed up by legal sanctions. Under certain types of contract such as contracts for
the sale of perishable goods, where time is expressly or impliedly of the essence, any
lateness in performance entitles the other party to determine the contract. However,
construction contracts very rarely fall into this category. Thus, the employer’s
remedy for late completion will be an award of damages for breach of contract. It is
standard practice in building and civil engineering contracts to state in advance what
the damages shall be for delay, and this is usually done by specifying a fixed sum of
money to be due for every day, week or month by which the contractor fails to meet
25 [1999] 1 MLJ 65. 26 [1998] 4 MLJ 169.
20
the prescribed completion date. Such sums are called liquidated and ascertained
damages or LADs (Murdoch and Hughes, 2000).
Halsbury’s Laws of Malaysia (Building and Construction) also stated that
generally, contracts for construction works usually provide that in the event of the
contractor’s failure to complete by the date specified for completion, the contractor is
to pay a specified sum or that the employer may deduct a specified sum from money
due to the contractor.27
2.4.1 Liquidated Damages
Delay in performance is treated as going to the root of the contract without
regard to the magnitude of the breach.28 Damages for a contractor’s failure in breach
of contract to complete on time are often subject of a provision for liquidated
damages (Furst and Ramsey, 1991).
According to Murdoch and Hughes (2000), a claim for liquidated damages
can only succeed where the contract makes express provision for it. Most building
contracts contain such a clause. Liquidated damages provisions are in principle
perfectly acceptable and they are to be encouraged as they enable the parties to know
from the start as much as possible about the risks they bear.
When the LAD are agreed, the employer’s only remedy for late completion
by the contractor is a sum not exceeding the specified amount. He does not have an
27 See PAM Conditions of Contract (1998) cl 22; IEM Conditions of Contract cl 40; PWD Conditions of Contract Forms 203/203A cl 40. See also Arab Malaysian Corpn Builders Sdn Bhd v ASM Development Sdn Bhd [1998] 6 MLJ 136. 28 Lombard plc v Butterworth [1987] Q.B. 27 at 535 (C.A.).
21
option of claiming unliquidated damages. Should no date for Completion be inserted
in the Appendix, then no liquidated damages will be payable since there is then no
date from which liquidated damages can run. There must be a definite date to act as
a starting point and if the completion date has passed due to the default of the
employer for which no extension of time is given by the architect, the employer’s
right to liquidated damages will be lost.29 (Rajoo, 1999).
Section 75 of the Contracts Act 1950 deals with the effect of a sum named in
a contract which is payable in cases of breach of contract, and in Malaysia ‘there is
no difference between penalty and liquidated damages’.30 Section 75 of the Act
provides:
When a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is proved to
have been caused thereby, to receive from the party who has broken
the contract reasonable compensation not exceeding the amount so
named or, as the case may be, the penalty stipulated for.
29 See Sim Chio Huat v Wong Ted Fui [1983] 1 MLJ 151; Thamesa Designs Sdn Bhd v Kuching Hotels Sdn Bhd [1993] 3 MLJ 25. 30 Maniam v The State of Perak [1975] MLJ 75; Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89.
22
2.5 Extension of Time
2.5.1 Purposes of Extension Provisions
According to Eggleston (1992), a contractor is under a strict duty to complete
on time except to the extent that he is prevented from doing so by the employer or is
given relief by the express provisions of the contract. The effect of extending time is
to maintain the contractor’s obligation to complete within a defined time and failure
by the contractor to do so leaves him liable to damages, either liquidated or general,
according to the terms of the contract. In the absence of extension provisions, time is
put at large by prevention and the contractor’s obligation is to complete within a
reasonable time. The contractor’s liability can then only be for general damages but
first it must be proved that he has failed to complete within a reasonable time.
Therefore, extension of time clauses have various purposes which are:
1. to retain a defined time for completion
2. to preserve the employer’s right to liquidated damages against acts of
prevention
3. to give the contractor relief from his strict duty to complete on time in respect
of delays caused by designated neutral events
It is a common belief in the construction industry that extensions of time are
solely for the benefit of the contractor. At face value by giving the contractor more
time to complete the works and by reducing his liability for liquidated damages they
do appear to be one-sided. It is not the contractor who has most need of extension of
time provisions, it is the employer. A string of well documented cases from Holme v
Guppy31 to Rapid Building v Ealing32 confirm that the courts will not uphold
liquidated damages where the employer has prevented completion on time unless
31 Supra note 3. 32 Supra note 4.
23
there is express provision in the contract to extend time for the employer’s default.
Lord Fraser’s comment in Bilton v GLC33 sums it up:
‘… The general rule is that the main contractor is bound to complete
the work by the date for completion stated in the contract. If he fails to
do so, he will be liable for liquidated damages to the employer. That is
subject to the exception that the employer is not entitled to liquidated
damages if by his acts or omissions he has prevented the main
contractor from completing his work by the completion date: see, for
example, Holme v Guppy (1838) and Wells v Army and Navy Co-
operative Society (1902). These general rules may be amended by the
express terms of the contract…’
Extension of time clauses are commonly entered into construction contracts
essentially for the benefit of the employer, since in the event of prevention or breach
by the employer a contractual date for completion may be maintained and the
liquidated damages provisions preserved. For an extension of time provision to be
effective in such circumstances it must clearly give the means to extend the period for
completion (Brewer Consulting, 2005). Chow (2004) also pointed out that under
English common law, time extension provisions are regarded as being inserted for the
benefit of the employer since they operate to keep alive the liquidated damages
provisions in the event of delay caused by the employer’s acts of prevention. The
courts have consequently ruled that they are to be interpreted contra proferentum
against the employer.
33 (1982) 20 BLR 1, HL.
24
2.5.2 Grounds for Extension of Time
According to Chow (2004), construction contract provisions may either
stipulate a list of events in respect of which extensions of time may be granted or,
alternatively, adopt a more general formulation. Both approaches should take into
account the attitude of the courts in construing time extension clauses. From the
employer’s standpoint, it is crucial that the provisions should expressly allow for
extensions in respect of delays arising from a breach or act of prevention caused by
the employer. The formulation adopted in the major standard forms such as the JCT
Contract (1998), ICE Conditions of Contract (7th Ed, 1999) and PAM 1998 is a
combination of both approaches. The time extension provision typically lists the
common causes of delay in respect of which the employer accepts that time
extensions may be granted, followed by a general “catch all” paragraph which is
intended to bring within the ambit of the provisions events of delay which have not
been specifically stated in the clause. Thus, under clause 44(1) of the ICE Conditions
of Contract (1999 Ed), paragraphs (e) and (f) extend the power for extending time to
cover “any delay, impediment, prevention or default by the employer” and “other
special circumstances of any kind whatsoever which may occur”. A similar approach
is used in clause 8.4(e) of the FIDIC Contract (1999).
2.5.2.1 Force Majeure
The expression ‘force majeure’ is of French origin. Under the French Civil
Code force majeure is a defence to a claim for damages for breach of contract. It
needs to be shown that the event made performance impossible, was unforeseeable
and was unavoidable in occurrence and effects (Eggleston, 1992).
According to Chow (2004), the expression force majeure was first used in
clause 23(a) of the JCT 63 Form and has since been retained in successive editions of
that standard form. In the 1998 edition of the JCT Contract, it is specified as a
25
“relevant event” for the purpose of time extensions under clause 25. The term itself is
a curious French expression which is usually considered to cover a host of highly
unusual and superhuman events. In the classic case of LeBaupin v Crispin34, the
court accepted that the “term is used with reference to all circumstances independent
of the will of man, and which it is not in his power to control…” It was held to
include wars, epidemics and strikes, but a cautionary note was struck in the judgment
of that case on the interpretation of a force majeure clause:
… [The force majeure clause] should be construed in each case with
close attention to the words which precede or follow it with due regard
to the nature and general terms of the contract. The effect of the
clause may vary with each instrument…35
Chow (2004) further noted that at first instance, it may be difficult to
appreciate the need for the JCT Contract to expressly include force majeure as a
ground for time extension. Events such as wars, strikes and inclement weather are
already separately listed in the time extension provisions, so that it could be suggested
that the expression as used in the JCT form must have been intended to provide for
something else. There is no direct authority on this point, but it is highly arguable
that the original objective may have been as a general premise to cover any event,
other than those specifically mentioned, which resides beyond human anticipation. If
so, the conceivable range of events must be a very narrow one and it is not surprising
that there has been no reported case on the JCT contract where this ground for time
extension has been considered.
Clause 19.1 of the FIDIC conditions provided a more elaborate definition of
this expression and defines force majeure as an “exceptional event or circumstance”
which satisfies the following criteria:
1. It must be beyond the control of the relying party.
34 [1920] 2 KB 714. 35 Ibid.
26
2. The relying party could not have reasonably provided for the event or
circumstances before entering into the contract.
3. Having arisen, the relying party could not have reasonably avoided or
overcome the said event or circumstance.
4. It must not be substantially attributable to the other party.
A force majeure event under the FIDIC Contract must therefore satisfy all the
four conditions prescribed here. In the context of a construction claim advanced by
the contractor, the “other party” refers to the employer. Chow (2004) therefore noted
that the paragraph appears to envisage that where the claim arises from, say a breach
by the employer, it is considered that the contractor will in most cases elect to sue for
breach of contract, rather than invoke the force majeure clause since this reduces the
onus of proof and is likely to provide him with a more extensive range of reliefs.
Clause 19.1 also specifically lists down a number of situations which are deemed to
be treated as force majeure which include wars, terrorism, strikes and lockouts and
natural catastrophes.
2.5.2.2 Variations and Extra Works
Eggleston (1992) stated that when variations or extra works cause delay to
completion, the contractor will have a clear case for extension of time, or if there is
no express provision to extend time, the employer will have lost his right to liquidated
damages. It is the following types of questions which give rise to arguments. For
example, have the variations actually caused delay to completion? Are the extra
works really extra? Could the contractor have accommodated them in his
programme? Some of these matters have been considered previously and others are
considered under particular forms but it is worth just noting here that extra quantities
are not necessarily the same as extra works and in some forms of contract, it is the
contractor and not the employer who takes the risks on quantities.
27
The particular situation where omissions of work may be a premise for a time
extension should be noted. Such a situation may arise, for instance, where plant and
equipment have already been bought on site and these have been prepared to support
the execution of a particular item of work. This item of work is then subsequently
omitted, thereby necessitating a new and possibly less productive sequence of work.
There is no direct English case authority on this point, but in the South African case
of Kenny and Hingles’ Trustee v Union Government36, it was held that where the
language of a time extension provision empowered the engineer to assess the period
of delay consequent upon the ordering of extras, it would be reasonable for the
engineer to “take into account in deciding as to allowances for such delay the effect
of other orders requiring omissions.” (Chow, 2004).
2.5.2.3 Exceptionally Adverse Weather Conditions
This ground of time extension is found in the provisions of most of the major
standard forms. The general formulation is that time may be extended only when the
contractor can demonstrate that the weather conditions encountered could be properly
described as exceptional”. In construing the term “exceptional”, consideration should
be given as to whether the weather itself was exceptionally adverse or inclement, so
as to give rise to the delay and not whether the magnitude of the delay itself was
exceptional.37 It is suggested that this construction is consistent with the intent of this
provision in the other standard forms as well.
In Malaysia, the predominant issue with weather conditions, in so far as
construction operations are concerned, is the intensity of rainfall. To formulate a case
for extension of time on the basis of exceptional rainfall, a contractor has to show,
from site records, the number of days in a particular month in which the actual
rainfall actually encountered exceeds a prescribed level and this is commonly referred
36 (1928) TD 272 at 289. See also another South African case, Chaffer and Tassie v Richards (1905) 26 NLR 20. 37 Walter Lawrence v Commercial Union Properties (1984) 4 ConLR 37.
28
to as the number of “wet days”. Next, the contractor compares the number of wet
days encountered with the number of wet days which are indicated by statistical
averages in meteorological records. Exceptional rainfall conditions for a particular
month are then established when the number of wet days actually encountered exceed
the number of wet days recorded in these meteorological averages. However, it is not
sufficient for an applicant for time extension to merely show the incidence of wet
days and hence, adverse weather conditions. It is necessary to establish the link
between the conditions and the progress of works, and in particular, the contractor has
to show that the nature of the construction operations being undertaken during the
period of “wet days” in a particular month are indeed operations which are
susceptible to the effects of these exceptional rainfall conditions (Chow, 2004).
2.5.2.4 Late Possession of Site
Under common law, an employer is treated to have committed a breach of
contract if he fails to give timely possession of site.38 Consequently, to ensure that
time will not be set at large in the event of a late handover of site to the contractor,
most standard forms expressly includes this event as one of the grounds for time to be
extended (Chow, 2004). Eggleston (1992) brought up the issue that whether or not
failure by the employer to give possession of site at a time convenient to the
contractor is an act of prevention will depend on the wording of the contract. If the
contract simply states a date of possession of the site, the contractor is entitled to the
whole of the site from the outset; but if the contract specifies phased release of the
site, the contractor is obliged to accommodate the restrictions that will impose.
38 See Felton v Wharrie (1906) Hudson’s Building and Engineering Contracts (4th Ed) Vol 2, p 398; Earth & General Contractors Ltd v Manchester Corporation (1958) 108 LJ 665; Rapid Building v Ealing Family Housing (1984) 29 BLR 5; Holme v Guppy (1838) 3 M&W 387.
29
2.5.2.5 Sub-contractors
According to Eggleston (1992), on basic principles delays caused by domestic
sub-contractors do not give grounds for extensions of time. Unless there are express
provisions in the contract to cover delays so caused or there are other provisions for
extensions that can be interpreted to cover sub-contractors, the problems of sub-
contractor default will rest between the main contractor and sub-contractor. If the
contractor is required by the terms of the contract to obtain approval to his sub-
contractors from the contract administrator and the approval is unreasonably delayed,
that could be a breach of contract with the potential to defeat the liquidated damages
provisions unless there are extension clauses covering employer’s act of prevention.
Nominated sub-contractors are the cause of many complex disputes, and
however much forms of contract attempt to place responsibility for such sub-
contractors on main contractors, it is very difficult for the employers to avoid sharing
some of the responsibility for their delays and defaults. The burden of renomination
after default is a heavy one, with the employer bound to avoid delay in renominating
and to allow time for rectification of faulty work.39
2.5.2.6 Delay in Approvals and Instructions
The drawings and technical documents provided at the time of contract are
frequently insufficient to enable the contractor to carry out all aspects of the works
required under the contract. To enable the works to proceed properly, it is usually
necessary for the architect or engineer to issue instructions or additional drawings
during the course of the works. Most time extension provisions provide for time to be
extended where the architect or engineer fails to issue these instructions or drawings
in a timely manner. An issue which is closely related to time extensions granted for
39 See North West Metropolitan Regional Hospital Board v Bickerton (1970), Peak v McKinney (1970), Percy Bilton v GLC (1982) and Fairclough v Rhuddlan Borough Council (1985).
30
delays in instructions is the date when the contractor should have contacted or applied
to the architect or engineer for these instructions. Most contracts require that the
contractor should apply for the relevant approval or instruction at an appropriate
juncture during the course of the works.
2.5.2.7 Other Commonly Stipulated Grounds
The major standard forms of contract also allow for the time to be extended in
respect of the following events:
1. Strikes and civil commotion which affect the works or affect the manufacture
or transportation of goods for use in the works40
2. Disruption arising from actions or policy changes of a government body or
statutory organisation41
3. Unexpected market conditions which affect the contractor’s ability to procure
labour or materials for the works such as a sudden shortage of aggregates or
cement42
4. Opening up for inspection any work covered up or the testing of any work,
materials or goods43
40 Clause 25.4.4 of JCT Contract (1998 Ed); clause 23.7(iv) of PAM Form (2nd Ed) (1998); Clause 43(h) of PWD 203A and clause 24.1(c) of CIDB 2000. 41 Clause 25.4.9 of JCT Contract (1998 Ed); Clause 8.5 of the FIDIC Contract (1999 Ed). In the case of the FIDIC Contract, clause 8.5 describes the condition under which this event may qualify for an extension of time under clause 8.4(b). 42 Clause 25.4.10 of JCT Contract (1998 Ed); clause 8.4(d) of FIDIC Contract (1999 Ed). 43 Clause 23.7(x) of PAM Form (2nd Ed) (1998); clause 24.1(h) of CIDB 2000.
31
2.5.2.8 Causes beyond the Contractor’s Control
A final remark should be made on the general category of events which comes
frequently under a supposedly “catch all” or “umbrella” ground typically formulated
as “any cause beyond the control of the contractor.” Such a provision is not intended
to cover delays arising from events which are reasonably foreseeable by the
contractor at the time of contract and which could be avoided by reasonable action on
the part of the contractor. Thus, it would not cover, for example, delay caused by the
contractor’s financial stringency, where this is triggered by the actions of a third party
on whom the contractor depends for financial support. There should also be no basis
for time to be extended in respect of delays arising from events which are caused by
the contractor’s want of competence or judgment. These events include ineffective
supervision, insufficient manpower and a failure to plan the work properly (Chow,
2004).
From the authorities that a general expression like “causes beyond the
contractor’s control” would not be sufficiently embracing to cover delays associated
with some breach or act of prevention by the employer. For this purpose, a separate
provision has to be inserted in the time extension clause to cater specifically to these
delay events.44
2.6 Time at Large
The standard form building and civil engineering contracts deal with the
specification of time to complete in two different ways. On the one hand, the
building contracts tend to invite the insertion (in the appendix to the building
44 Clause 44(1)(e) of the ICE Conditions of Contract (7th Ed); clause 8.4(e) of the FIDIC Contract (1999); clause 23.7(xi) of the PAM Form (2nd Ed) (1998).
32
contract) of a fixed calendar date for the handover of possession of the site to the
contractor coupled with a fixed completion date by which the contract must be
practically completed. There, the period between the two dates is described as the
contract period which the contractor must carry out and complete the work. On the
other hand, the engineering contracts tend to stipulate that the work shall be
completed within a specified number of days or weeks from the notice to proceed.
The date on which the notice to proceed may be given is then left open for a limited
period of time. It is only once the notice to proceed has been given that the contract
period can commence and the date for completion can be calculated.
During the execution of the contract, circumstances may arise which render
that completion date unenforceable. Of itself, the failure competently to put into
effect the contractual machinery to extend the time for completion by the contract
administrator is not sufficient to render the completion date unenforceable and time
at large. The effect must be that the parties to the contract do not truly know their
position. If the true position can be established by other contractual means then the
breakdown is likely to be immaterial. Provided always that the true position can be
restored by the operation of other contractual machinery, for example reference to an
adjudicator, arbitrator or the court to open up and review the decision or absence of a
decision, the failure of the contract administrator during the course of the contract
will not set time at large.45 (Pickavance, 2005).
2.6.1 Events Giving Rise to Time at Large
According to Pickavance (2005), in principle, there are at least three
possibilities as to how time may have become “at large”:
45 Panamena Europea Navigacion (Compania Limitada) v Frederick Leyland & Co Ltd [1947] AC 428.
33
1. There may be a contract together with a number of employer’s risk events for
which the contract makes provision to extend time but which cannot be
applied because the draftsman has failed to specify the contract completion
date or time for performance in the contract.
2. There may be a contract completion date together with a number of
employer’s risk events for which the contract makes provision to extend time
but which have either become inoperable or do not apply to the event causing
the delay to completion so that, in the circumstances, the employer has in fact
no power to extend time.46
3. There may not be a contract completion date simply because there was no
contract.
The first two possibilities as to how time might have become at large require,
as a starting point, the assessment of a reasonable period for the works for which the
contractor has contracted and, while it is normally the case that the date for the
completion is stipulated by the terms of the contract, its proper revision under the
contract or by collateral agreement, that may not always be so.
Eggleston (1992) had the view that the circumstances of time becoming at
large are usually where an act of prevention by the employer creates delay and that
delay is not covered by an extension of time provision; and to a lesser extent:
1. Where the provisions for extension of time have not been properly
administered or have been misapplied
2. Where there has been waiver of the original time requirements
3. Where there has been interference by the employer in the certifying process
46 See, for example, Gaymark Investments Pty Ltd v Walter Construction Group (1999) NTSC 143, (1999) 16 BCL 449; (2005) 21 Const LJ 70.
34
What is generally at stake in the matter of whether or not time is at large is
the employer’s right to deduct liquidated damages for late completion. This right is
lost completely if time becomes at large – the employer can still sue for general or
unliquidated damages for late completion but regard will then be had to the
contractor’s entitlement to a reasonable time.
Atkinson (2007) stated that the term “time at large” is usually used in
construction contracts in the situation where liquidated damages are an issue. If time
is “at large” then it is argued that liquidated damages cannot be applied, because
there is no date fixed from which the liquidated damages can be calculated. In some
situations the date for completion may be relevant to termination and the issue
whether or not there has been a breach of contract by failure to complete. Time is
made at large in four situations:
1. No time or date is fixed by the terms of the contract by which performance
must take place or be completed.
2. The time for performance has been fixed under the contract, but has ceased to
apply either by agreement or by an act of prevention (which includes
instructed additional work) or breach of contract by the Employer with no
corresponding entitlement to extension of time.
3. The Employer has waived the obligation to complete by the specified time or
date. An alternative situation is that the Employer is faced with a breach of
contract by the contractor which would entitle to Employer to terminate the
employment of the contractor and/or to bring to an end the primary
obligations of the parties to perform, but instead elects to continue with the
performance of the contract.
4. The Employer has interfered in the certification process to prevent proper
administration of the contract.
35
2.6.1.1 No Time or Date Fixed in the Contract
As mentioned, many construction contracts and standard forms of contract
usually place an obligation on the contractor to complete the works by a specified
completion date or within a specified period. If no date or period is fixed by the
contract then the objective intention of the parties must be ascertained. In the case of
a contract under the Supply of Goods and Services Act 1982, if the date is not fixed
by a course of dealing between the parties, a term will be implied that the
contractor’s obligation is to complete within a reasonable time (Section 14(1)). In J
and J Fee Ltd v The Express Lift Company Ltd47 there had been correspondence
between the parties on the date of commencement and completion. The last
correspondence from Express Lift stated that it could see little possibility of
improvement on the dates previously given, but suggested that the situation be
monitored and if it became possible to review the situation. It was held that as a
matter of construction of its express terms Express Lift made a contractual offer of
the completion date which it consistently offered before and that offer was accepted.
The last letter was not written in plain “take it or leave it” terms but held out the
possibility of bettering the completion date. Nonetheless there were dates for
commencement and completion as express terms of the contract. His Honour Judge
Peter Bowsher QC stated that if he was wrong on that issue, then there was a term
implied that Express Lift would complete within a reasonable time. He gave a
provisional view, without deciding, that based on the documents before him that it
would be impossible for Express Lift to contend that a reasonable time for
completion of the works would be any later than the date they had consistently put
forward. (Atkinson, 2007).
47 [1993] 34 ConLR 147.
36
2.6.1.2 Time or Date Ceases to Apply by Acts of Prevention
The prevention principle comes from a generally stated legal principle that a
party cannot benefit from its own wrong. The prevention principle has a very long
history in the common law. As long ago as 1838 the court held in the case of Holme
v Guppy48 that where the contractor had been prevented from starting the works
because of the activities of the employer's other workmen, a fresh contract could not
be found and liquidated damages could not be applied (Brewer Consulting, 2005).
Eggleston (1992) also mentioned that the principle of prevention is of general
application in contracts and is to the effect that one party cannot impose a contractual
obligation on the other party where he has impeded the other in the performance of
that obligation. In other words of Lord Justice Denning in Amalgamated Building
Contractors Ltd v Waltham Holy Cross Urban District Council49, ‘the building owner
cannot insist on a condition if it is his own fault that the condition has not been
fulfilled’. “There is an implied contract by each party that he will not do anything to
prevent the other party from performing a contract or to delay him in performing it.
Generally such a term is by law imported into every contract.”50
An act of prevention may vary from an omission on the part of the employer,
a fault, or even the ordering of variations and extras which might be fully
contemplated by the contract. In SMK Cabinets v Hili Modern Electrics Pty Ltd51 Mr.
Justice Brooking summarized the law as follows:
A wide variety of expressions have been used to describe the act of
prevention which will excuse performance. At times the words are
employed which suggest that any act or omission preventing
performance will suffice: Dodd v Churton (1897), where all three
48 Supra note 3. 49 [1952] 2All ER452 at 452 (CA). 50 Barque Quilpue Ltd v Bryant (1904), per Lord Justice Vaughan Williams. 51 [1984] VR 391; (1984) 1 Const LJ 159 at p. 396.
37
members of the Court speak of an act: Bruce v The Queen (1866),
where the Court refers simply to prevention: Percy Bilton Ltd v
Greater London Council (1982). Hudson Building and Engineering
Contracts (10th ed.) p. 631 (acts or omissions) speaks of acts, whether
authorized by or breaches of the contract but at p. 700 refers to
wrongful acts. In Perini v Greater Vancouver Sewerage and Drainage
District (1966) Bull J A with whose judgment Lord J A agreed, spoke
of a wrongful act. The expressions used by Salmon L J and Phillimore
L R in Peak Construction (Liverpool) Ltd v McKinney Foundations
Ltd (1970) are “fault” and “fault or breach of contract”. Another
phrase to be found is “act or default” in Amalgamated Building
Contractors Ltd v Waltham Holy Cross Urban District Council
(1952). Words used by Lord Denning (“his conduct – it may be quite
legitimate conduct, such as ordering extra work”) appear in a passage
cited with approval in the leading speech in the House of Lords:
Trollope & Colls Ltd v North West Metropolitan Regional Hospital
Board (1973). I interpolate the observation that any formulation must
accommodate the case of the ordering of extras, whether or not in the
exercise of a power conferred by the contract. In the well know case
of Roberts v Bury Improvement Commissioners (1870) two different
statements appear. Blackburn and Mellor J J, say that no person can
take advantage of the non-fulfillment of a condition the of which has
been hindered by himself, while Kelly C B and Channell B would ask
whether performance has been prevented by a wrongful act; both
statements are cited by Lord Thankerton in delivering the principal
speech in Panamena Europa Navigacion (Compania Limitada) v
Frederick Leyland & Co Ltd (1947). It is worth noting the formulation
of Davis J of the Supreme Court of Canada in Ottawa Northern and
Western Railway Co v Dominion Bridge Co (1905).
38
The editors of Building Law Reports when commenting on the Court of
Appeal decision in Percy Bilton v Greater London Council52 expressed the matter in
more general terms:
“Act of Prevention” is not easy to define but historically it has come to
mean virtually any event not expressly contemplated by the Contract
and not within the Contractor’s sphere of responsibility. From the
cases illustrated it may be seen that it is generally first necessary to
determine whether there has been a breach of contract on the part of
the employer or some other positive act or omission thereby
preventing the contractor from completing the contract work by the
due date and secondly, whether the contract did not make any express
provision for extending time in such circumstances.
The older cases were largely decided in relation to contract
where little or no provision was made for extending the time for
completion so as to keep alive the Contract Completion Date and thus
preserve the right to liquidated damages. Contract nowadays generally
contain extensions of time clauses drafted so as to cover the
eventualities likely to constitute “acts of prevention” and are in many
cases meticulous in their definition of the risks and responsibilities
assumed by each party.
It is submitted that in a modern contract such as the Standard
Form of Building Contract the correct analysis of events which may
delay completion should not be between “acts of prevention” and
“other acts” but rather between matters for which the contractor in law
assumes the risk and matters for which does not assume the risk. Such
an approach is based upon the proposition that by undertaking to
complete the work within the time stated a contractor assumes the
responsibility of surmounting all risks other than those constituting
breaches of contract or fault by the employer. It is sometimes useful to
consider this apportionment of risk in terms of the “fault” of one party
or the other, although “fault” is an emotive word.
52 [1982] 1 WLR 794.
39
An example of the prevention principle operating within the construction
industry is where the contract provides a date for completion of the works but the
employer, through its acts or omissions, prevents the contractor from achieving that
date. Except to the extent that the contract provides otherwise, in such a situation the
employer will no longer be entitled to demand completion by the contractual date,
time becomes at large and the employer will not be entitled to claim liquidated and
ascertained damages for the late completion.
According to Pickavance (2005), under most standard forms of contract, the
employer is provided with the power to extend the time for completion in the event
of the occurrence of one or more of the events listed as grounds of extension of time
in the contract. However, in Rapid Building Group v Ealing Family Housing53 heard
before the Court of Appeal in 1984 (involving a development under JCT 63) there
was no applicable clause permitting the employer to grant an extension of time. In
that case, owing to the presence of squatters, the employer was unable to give
possession of site to the contractor on the due date. There is no provision in JCT 63
for extension of time for late possession. The contractor was therefore able
successfully to argue that time was at large. The contractor’s obligation was
therefore altered from one of completing by the contract completion date to one of
completing within a reasonable time and the employer lost its right to levy liquidated
damages. Therefore, in the event that, for reasons within the employer’s control, the
contractor is prevented from completing by the contract completion date, the
employer can no longer insist upon completion by that date and the contractor is then
left without a firm date by which to complete. Time is then said to be “at large” as a
result of the effect of what is known as the prevention principle as described earlier.
The application of the prevention principle is also famously illustrated by the
case of Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd.54 This was
an action by the contractor against a nominated subcontractor in which the contractor
was employed the local authority (employer) for the erection of high-rise buildings
53 Supra note 4. 54 (1970) 1 BLR 111.
40
for which the nominated subcontractor was required to carry out the piling. In the
contract between the contractor and the employer, time was said to be “of the
essence” without any provision for the contract period to be extended for acts or
omissions of the employer that might interfere with the works. During the course of
the works, serious faults were discovered in the piles and the work was suspended
pending investigation and repair. However, because of delay on the employer’s part,
an expert was not engaged until some six months later. His recommendations were
eventually put into effect some ten months after the faults had first been discovered
and the piling was not completed until 58 weeks after the work had been suspended.
As a result of the subsequent delay to completion, the employer claimed liquidated
damages from the contractor who, in turn, claimed the same liquidated damages from
the nominated subcontractor.
The Court of Appeal found that, because part of the period of delay to
completion had been caused by the employer itself and there was no clause in the
contract between the contractor and the employer that enabled the employer to extend
time for the effect of its own failures, there was then no date by which the contractor
was obliged to complete and hence there was no enforceable completion date from
which liquidated damages could be calculated. In explaining the application of the
prevention principle in this case Salmon LJ said:
A clause giving the employer liquidated damages as so much a week
or month which elapses between the date fixed for completion is
usually coupled, as in the present case, with an extension of time
clause…If the failure to complete on time is due to the failure of both
the employer and the contractor, in my view, the clause does not bite.
I cannot see how, in the ordinary cause, the employer can insist on
compliance with the condition if it is partly his own fault that it cannot
be fulfilled.
If the employer wishes to recover liquidated damages for
failure by the contractor to complete on time in spite of the fact that
some of the delay is due to the employer’s fault or breach of contract,
an extension of time clause should provide, expressly or by necessary
41
interference, for an extension on account of such fault or breach on the
part of the employer.
In Wells v Army and Navy Cooperative Society55 the contractors undertook to
complete a building contract within a year, unless the works were delayed by
variations, sub-contractors, “or other causes beyond the contractor’s control”. The
contract conditions provide that the decisions of the employer as to time extensions
and the determination of delays were to be final. As it turned out, there was a delay
in completion by one year. The employer granted a three-month extension in respect
of that part of the delay which was attributable to sub-contractors. The contractors
were able to show that the delays were also caused by late site possession, delay on
the part of the employer in furnishing drawings and additional works. The court
ruled that while the time extension provisions were able to deal with delays
generated by sub-contractors, the expression “or other causes beyond the contractor’s
control” did not extend to include the employer’s failure to afford timely site
possession nor his failure to furnish drawings at the appropriate time. Consequently,
the time extension provision could not be held to cover these acts of prevention and,
hence, could not operate to retain the operability of the liquidated damages provision.
This decision was cited with approval by the Court of Appeal of British
Columbia in Perini Pacific Ltd v Greater Vancouver Sewerage and Drainage Board
(1966), where it was decided that an extension of time clause which provided for
time to be extended on account of “extras or delays occasioned by strikes, lockouts,
force majeure or other cause beyond the control of the contractor” similarly would
not cover delays caused by the employer’s delivery of certain machinery in a
defective condition. Again, no liquidated damages could be recovered, although it
was forcefully argued on behalf of the employer that the effect of the employer’s act
of prevention only accounted for 45 days out of the total delay of 99 days.
55 (1902) 86 LT 764.
42
The operation of prevention principle was also clearly demonstrated in the
classic case of Dodd v Churton.56 In that case, a building contract permitted extra
work to be ordered during the course of the contract. There were the usual
provisions for the imposition of liquidated damages in the event of delay in
completion, but there was no express provision to enable time to be extended.
Additional work was ordered which had the effect of delaying completion. The
employer attempted to impose liquidated damages on the period of delay after an
allowance of a fortnight had been made for what he considered was the appropriate
portion of the delay caused by the additional work. The court ruled that the
employer was not entitled to claim any liquidated damages. The delay was attributed
in part to his act of ordering additional work but there was no operative time
extension provision in the contract which would have permitted for the completion
time to be extended, thereby enabling the liquidated damages clause to be kept alive.
In his judgment Lord Esher MR stated the position under common law as follows:
The principle is ... that, when one party to a contract is prevented from
performing it by the act of the other, he is not liable in law for that
default; and accordingly a well established rule has been established in
cases of this kind ... to die effect that if the building owner has ordered
extra work beyond that specified by the original contract which has
necessarily increased the time requisite for finishing the work, he is
thereby disentitled to claim the penalties for non-completion provided
for by the contract. The reason for that rule is that otherwise a most
unreasonable burden would be imposed on the contractor. 57
56 [1897] 1 QB 562 (CA). 57 [1897] 1 QB 562, 566. See also Thornhill v Neats (1860) 8 CB (ns) 149; Russell v Viscount Sa da Bandeira (1862) 13 CB (NS) 149; Westwood v Secretary of State for India (1863) 7 LT 736; Murdoch v Lockie (1897) 15 NZLR 296; Meyer v Gilmer (1899) 18 NZLR 129; Cf Tew v Newbold-on Avon School Board (1884) 1 C&E 260; Trollope & Colls Ltd v NW Metropolitan Regional Hospital [1973] 1 WLR 601 (HL); Bilton v Greater London Council (1982) 20 BLR 1, HL; SMK Cabinets v Hili Modern Electrics [1984] VR 391 (Victoria Full Court).
43
2.6.1.3 Waiver
Pickavance (2005) asserted that apart from the circumstances in which there
is no specified time, or in which, whilst there may be a specified time, there is no
power to vary it, there is one other situation in which the contractor may not have a
fixed date by which it must complete. That is the circumstance in which the
employer has waived the obligation to complete by the specified time or date or,
where the employer, faced with a breach of contract by the contractor which would
entitle the employer to terminate the employment of the contractor and/or to bring to
an end the primary obligations of the parties to perform, instead elects to continue
with the performance of the contract. For example, in Charles Rickards Ltd v
Oppenheim,58 the plaintiff agreed to supply a Rolls Royce motor car chassis and to
build a body on it within seven months. It failed to complete the work by the agreed
delivery date, but the defendant waived the original delivery date and new dates were
promised and agreed. Eventually, the defendant gave written notice to the plaintiff
stating that, unless he received the car by a firm date, four weeks away, he would not
accept it. The car was not delivered within the time specified and was not completed
until some months later when the defendant refused to accept it. The Court of
Appeal held that he was justified in doing so. After waiving the initial stipulation as
to time, the defendant was entitled to give reasonable notice making time of the
essence again, and on the facts the notice was reasonable.
Where a new date is not stipulated, then performance must be achieved
within a reasonable time, whatever that happens to be in the circumstances. So, for
example, in the case of Astea (UK) Limited v Time Group Limited,59 Astea was a
provider of software to Time Group, which was a manufacturer and retailer of
personal computers. Astea had agreed to complete performance of its services by the
end of October 2000 or by 6 November 2000 (the facts seemed unclear). The dates
passed, no new completion date was set and, in March 2001, Time Group
58 [1950] 1 KB 616. 59 [2003] EWHC 725 (TCC).
44
subsequently claimed the contract had been repudiated and terminated the contract.60
It was common ground that strict compliance with an agreement to complete by the
end of October 2000 or by 6 November 2000 had been waived by failure to treat
such failure as repudiatory and that Astea’s obligation thereafter was to complete
within a reasonable time.
2.6.1.4 Failure of Contractual Machinery
According to Atkinson (2007), if the time or date for completion is effected
by events which entitle the contractor to an extension of time, but the contractual
machinery can no longer operate, then time is at large. The circumstances will be
rare.
In Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium (No 2)
[1998], BRL was awarded the contract for the construction of a new golf course on a
reclaimed landfill site under an amended ICE 5th Edition. One issue was whether
the contractual machinery had broken down and if so the effect. It was held that a
breakdown of the contractual machinery occurs when, without material default or
interference by a party to the contract, the machinery is not followed by the person
appointed to administer and operate it and, as a result, its purpose is not achieved,
and is either no longer capable of being achieved or is not likely to be achieved. His
Honour Judge Humphrey Lloyd stated that this could for most practical purposes be
equated to interference by a contracting party in the process whereby the other is
deprived of a right or benefit. Examples were the failure of an employer to re-
appoint an administrator or certifier on the resignation of the previously appointed
person or where that person fails or is unwilling to do his duty and the Employer will
not take steps to rectify the position. Reference was made to the decision in
60 It was not contended that it had been expressly agreed that Astea would do anything by a date proximate to March 2001, nor that any notice had been given making time of the essence of the contract in relation to Astea doing something by a date proximate to March 2001, it was just the date when Time Group’s patience expired.
45
Panamena Europea Navigacion v Frederick Leyland Ltd61. It was held that non-
compliance with the machinery by the administrator was not in itself sufficient: the
effect must be that either or both of the parties to the contract do not in consequence
of the breakdown truly know their position or cannot or are unlikely to know it. If
the true position is or can be established by other contractual means then the
breakdown is likely to be immaterial even when the result of the breakdown is that
one party does not obtain the contractual right or benefit which would or might
otherwise have been established by the machinery, provided that the true position can
be restored by the operation of other contractual machinery.
2.7 Conclusion
Colman J stated in the case of Balfour Beatty Building Ltd v Chestermount
Properties Ltd62 that:
In the absence of an express provision, the consequence of the
occurrence of an act of prevention (in this case the giving of a
variation instruction after the most recently fixed completion date) was
that the entire extension of time, completion date and liquidated and
ascertained damages code was displaced by a general contractual duty
to complete the works within what in all the circumstances was a
reasonable time from the date of the act of prevention failing which the
contractors would be liable for unliquidated damages for breach of
contract in failing to complete within a reasonable time.
In the absence of any agreed contractual mechanism for fixing a new date for
completion, no such new date can be fixed and the contractor’s duty then is to 61 [1947] AC 428. 62 62 Build LR 1.
46
complete the works within a reasonable time. Provided that a contractor has not
acted unreasonably or negligently, he will complete within a reasonable time despite
a protracted delay if the delay is due to causes outside his control. In such
circumstances, time is said to be at large (Chappell, 2005). The question of time
being at large and the relationship between the time for completion, liquidated
damages and extension of time clause are concluded below:
1. The general rule is that the main contractor is bound to complete the work by
the date for completion stated in the contract. If he fails to do so, he will be
liable for liquidated damages to the employer.
2. That is subject to the exception that the employer is not entitled to liquidated
damages if by his acts or omissions he has prevented the main contractor
from completing his work by the completion date
3. These general rules may be amended by the express terms of the contract,
such as extension of time clauses.
CHAPTER 3
REASONABLE TIME
3.1 Introduction
The Concise Oxford Dictionary (10th edition) by the Oxford University Press
defines the word “reasonable” as fair and sensible, and as much as is appropriate or
fair. In the nineteenth century and earlier, the courts imposed implied terms on the
parties to all contracts of certain types, such as sale of goods and bills of exchange,
by way of judicial legislation. Such implied terms have been consolidated by statute
and, as Judge Peter Bowsher QC remarked in Barratt Southampton Ltd v Fairclough
Building Ltd (1988):
These terms now have the status of standard terms of contract upon
which everyone is deemed to contract unless express terms are agreed
to the contrary. There is little to be learned from them when
considering what terms should be implied into a modern commercial
contract falling outside those old cases or the consolidating statutes
into which they have been incorporated.
A straightforward instance of this type of term is to be found in the field of
sale of goods. Where there is a contract for the sale of goods, the Sale of Goods Act
48
1979 implies various terms into the contract, for example that the goods will be
reasonably fit for any purpose made known to the seller. A similar term will be
implied in contracts for the supply of a service or contracts for work and materials by
section 4 of the Supply of Goods and Services Act 1982. (Powell-Smith et al., 1999)
In Barque Quilpue Ltd v Brown [1904] 2 KB 264, Vaughan Williams LJ said:
“... in this contract, as in every other, there is an implied contract by
each party that he will not do anything to prevent the other party from
performing the contract or to delay him in performing it. I agree that
generally such a term is by law imported into every contract, in the
same way as you import into every contract a stipulation that the
various things which are to be done by the one party or the other are, if
no time is specified, to be done within a reasonable time. In each of
these cases that may be called an implied contract.”
Where the construction contract does not expressly prescribe the time within
which the works are to be completed, the court may be prepared to infer that the
parties intended the works to be completed within a reasonable time.63 However,
before the court arrives at this inference, it must consider the contract as a whole and
the circumstances surrounding it. Where a completion date is clearly specified in the
contract, the contractor is expected to complete the works by the “due date”.64 In
such a situation, a contractor cannot maintain that he is entitled to complete the
works within a reasonable period after the date fixed65 (Chow, 2004).
The principles of reasonable time apply not only to contracts where time for
completion has not been specified in the first place, but also to contracts where
specified time has been lost and reasonable time substituted. Contracts whereby time
63 See: Charnock v Liverpool Corporation [1968] 1 WLR 1498 (CA). 64 See: Greater London Corporation v Cleveland Bridge and Engineering (1984) 34 BLR 57. 65 See: Raineri v Miles [1981] AC 1050 (HL), cf Amherst v James Walker [1983] Ch 305 at 315 (CA).
49
for completion is not specified are very common in construction and may indeed
form the majority. This is because when the average householder employs a builder
to fit new windows, erect a porch or decorate the bedrooms, he pays most attention to
the price and the written quotation but beyond that the contractual details are
frequently left open. Where there is a formal contract and time is at large the defunct
extension of time provisions may serve well as some guide as to what is reasonable
time. Thus, extra works, exceptional weather, strikes etc., might all be taken into
account. With or without a formal contract it might be appropriate to look at the
production capability of the contractor, his management and financial resources, and
his other contractual commitments, particularly if known to both parties (Eggleston,
1992).
3.2 Reasonable Time
It has been seen that an obligation to complete within a reasonable time
sounding in damages arises either because the contract is silent as to time, or because
the specified time has ceased to be applicable by reason of some matter for which the
employer is responsible. It remains to consider what is a reasonable time (Wallace,
1995).
According to Davies (1989), at the turn of the century the general rule of law
as it then stood was that any act necessary to be done by either party in order to carry
out a contract must be done within a reasonable time. The principle was interpreted
that except where time was of the essence of the stipulation, a breach of contract was
only committed in the case of unreasonable delay in the performance of any act
agreed to be done. For example, where time was not essential, a party failing to
complete a sale of land on the day fixed by the agreement did not commit a breach of
contract either in equity or at law; it was only on failure to complete within a
reasonable time after that day that the contract was broken.
50
However, by the middle of the century it was found that whether or not time
was of the essence, anyone who was actually injured by the breach of a time
stipulation could recover damages. In other words, a breach of a contractual
stipulation as to time which is not of the essence of a contract would not be treated as
a breach of a condition precedent to the contract, that is as a breach which would
entitle the innocent party to treat the contract as terminated or which would prevent
the defaulting party from suing the specific performance. Nevertheless, it was a
breach of the contract and entitled the injured party to damages if he had suffered
damage.
The current view of the law with regard to time within all contracts may be
summarized as follows. Time will not be considered to be of the essence unless:
1. The parties expressly stipulate that conditions as to time must be strictly
complied with
2. The nature of the subject matter of the contract or the surrounding
circumstances show that time should be considered to be of the essence
3. A party that has been subjected to unreasonable delay gives notice to the
party in default making time of the essence
In mercantile contracts, that is contracts which deal with commercial matters,
building contracts being analogous to them, time will be considered of the essence
out of practical necessity. Time is of the essence in building contracts because, for
example, the landowner has some use for the building on a specific date.
What then is the effect of the term ‘reasonable time’? According to Davies
(1989), what is a reasonable time may not depend solely upon the convenience and
financial interests of the contractors. No doubt, it is in their interest to have every
detail ‘cut and dried’ on the day a contract is signed, but a contract may not
51
contemplate that. Rather, it may contemplate further drawings and details being
provided. The architect or engineer is to have time to provide them which is
reasonable having regard to the point of view of him and his staff and the point of
view of the client as well, as the point of view of the contractor.
Where the time for completion is not given in the contract documents, the
Supply of Goods and Services Act 1982, Part 2, section 14(1), provides for a term to
be implied that the work will be carried out within a reasonable time. However, if
parties to a contract were told by the client the contract completion date because it
had been left out of the contract documents, such evidence may not be admitted,
particularly where to put in the date would lead to a severe liquidated damages clause
being brought into operation. In other words, as a general principle, where a
complete blank is left in a material part of the contract evidence is not admissible to
fill it.
According to Wallace (1995), it has been seen that an obligation to complete
within a reasonable time sounding in damages arises either because the contract is
silent as to time, or because the specified time has ceased to be applicable by reason
of some matter for which the owner is responsible. It remains to consider what a
reasonable time is. Reasonable time is primarily a question of fact and must depend
on all the circumstances which might be expected to affect the progress of the works.
There are few, if any reported cases in England directly involving a typical building
or engineering contract, but it is suggested that certain questions require to be
answered before a reasonable time can be properly assessed.
Wallace (1995) further elaborated that in the first place, when arriving at a
reasonable time in “ordinary circumstances”, the parties may or may not have
contracted with the particular resources and capacity of the particular builder in
mind. Thus, an owner may have deliberately chosen a small local or jobbing builder,
with limited resources of capital, plant and labour, to build his house, in the hope of
getting a cheaper or better quality job while sacrificing speedy completion. On the
52
other hand, a builder with limited resources might tender for a large contract in
competition with more substantial contractors and give no indication of his inability
to carry out the work as rapidly as them. In the former case the test might well be
subjective, and in the latter objective.66 A party may have expressly or impliedly
warranted or discounted his ability or capacity to maintain progress in a particular
situation or at a particular speed.
While it may be that most factors beyond the builder’s control will excuse
him, it is possible that expressly or impliedly the parties will have contracted with a
particular factor in mind. Thus, whereas there is little doubt that allowance would be
made for delay due to an unexpected strike, it would not, it is suggested, follow that a
contractor’s inability to obtain sufficient labour in competition with other contractors
in the district would excuse him. In the case of subcontractors of all kinds, whether
nominated or otherwise, it is submitted that the tendency of the courts should be not
to excuse the main contractor from meeting his main contract obligation in any case
where delay is caused by some act or omission within the subcontractor’s control,
though for that reason outside the main contractor’s direct personal control, since, in
such a case, the contractor will or should have his remedy against the subcontractor,
who in law is the contractor’s agent for the purpose of carrying out the works,
whether nominated or not. Any tendency to excuse the main contractor would in
effect be an invitation to subcontractors to default on their obligations, and might
well result in the owner failing to recover his own loss whereas the contractor might
still be able to recover any loss he personally might have suffered at the hands of the
subcontractor. Again, it may be a question whether the parties contracted with a
builder’s other commitments in mind. In approaching this question, it should be
borne in mind that with the increasing degree of specialist and sub-contracted work
in the building industry, the direct responsibilities of the main contractor have
become correspondingly limited to the provision of a site-organisation, a non-
specialised labour force, and materials and plant, so that in most cases the builder,
by entering into the contract, is, in effect, warranting that he has or will have at least
these available in sufficient quantity for due performance of his obligations. All
66 See Hydraulic Engineering Co Ltd v McHaffie, Goslett & Co. (1878) 4 QBD 670.
53
these are matters which will, no doubt, be taken into consideration when making the
initial “ordinary circumstances” assessment, before considering the actual post-
contract circumstances (Wallace, 1995).
According to Chow (2004), the test of “reasonableness” is sometimes
construed as being synonymous with the convenience and economic interest of the
contractor. In Neodox Ltd v Swinton and Pendlebury Borough Council67 the
contractor alleged that there was an implied obligation on the part of the employer to
provide all necessary instructions and details “in sufficient time to enable the
contractor to execute and complete the works in an expeditious and economic
manner and/or in sufficient time to prevent the contractor being delayed in such
execution and completion”. Diplock J ruled that what was a reasonable time did not
depend solely on the convenience and financial interests of the contractor. He
observed that while it may appear to the contractor that it is in his interest “to have
every detail cut and dried on the day the contract is signed”, such a state of affairs
could not have been contemplated at the time of the contract. He then proceeded to
hold that what was a reasonable time was a question of fact to be determined with
reference to all the circumstances of the case. These include:
1. Considerations of the employer’s engineer and his staff
2. The order by which the works were to be carried out and approved by the
engineer
3. The contractor’s requests for particular details
4. Whether the details requested relate to variations
5. The length of the contract period
Admittedly, the list of factors tendered by Diplock J in his judgment cannot, on any
stretch of imagination, be considered to be exhaustive. However, it does serve to
indicate the wide range of factors which have to be considered when determining the
question of “reasonableness” with respect to the timing of instructions, additional
drawings and information.
67 (1958) 5 BLR 34.
54
In calculation of reasonable time, Gill (1969) stated that all the circumstances
of the case should be taken into consideration, such as the nature of the works to be
done, the time necessary to do the work, the ability of the contractor to perform68, the
proper use of customary appliances69, and the time which a reasonably diligent
producer of the same class as the contractor would take.70
3.3 Statutory Provisions that Apply the Term “Reasonable Time”
3.3.1 Sale of Goods Act 1957 (Revised 1989)
According to Vohrah and Wu (2003), the statute applicable to sale of goods
in Peninsular Malaysia is the Sale of Goods Act 1957 (Revised 1989). There is no
equivalent statute for the states of Sabah and Sarawak and the law in these two states
is governed by section 5(2) of the Civil Law Act 1956 which provides, among others,
that ‘the law to be administered shall be the same as would be administered in
England in the like case at the corresponding period’. Consequently, these two states
are bound by statute to continue to apply principles of English law relating to the sale
of goods. The model of the local Sale of Goods Act (SGA) was the English Sale of
Goods Act of 1893 which is re-enacted almost in its entirety with some minor
modifications such as the numbering of the provisions.
Chapter IV of the SGA deals with the performance of the terms of the
contract, including the delivery of goods. Where under the contract of sale, the seller
is bound to send the goods to the buyer but no time for sending them is fixed, the
seller is bound to send them within a reasonable time (36(2)). Demand or tender of
68 Attwood v Emery (1856), 1 CB (NS) 110; 26 LJCP 73. 69 Lyle Shipping Co. v Cardiff Corporation [1900] 2 QB 638. 70 Supra note 66.
55
delivery may be treated as ineffectual unless made at a reasonable hour. What is a
reasonable hour is a question of fact (36(4)). Assuming that a seller is bound to
make delivery under the contract and he requests the buyer to take delivery, and the
buyer does not respond within a reasonable time after such request. The buyer is
liable to the seller for any loss occasioned by his neglect or refusal to take delivery,
and to pay a reasonable charge for the care and custody of the goods. This does not
affect the seller’s right for damages under the contract where the neglect or refusal of
the buyer to take delivery amounts to a repudiation of the contract (s.44). Where
delivery is delayed through the fault of either seller or buyer, the goods are at risk of
the party at fault as regards any loss which might not have occurred but for such fault
(s.26).
3.3.2 Supply of Goods and Services Act 1982 (UK)
In Singapore, Malacca, Penang, Sabah and Sarawak, the (UK) Supply of
Goods and Services Act 1982 is applicable and gives statutory status to rule that
largely existed in common law, mirroring the Sale of Goods Acts (in Singapore,
except for Part II). The 1982 Act extends the general philosophy of implied
warranties as to standard of performance to contracts for services and to the transfer
of goods under other contractual arrangements such as building contracts. Section 14
of the Act mentioned that where the time for performance has not been fixed, a term
is implied for performance ‘within a reasonable time’. What is a reasonable time is
stated in section 14(2) to be a question of fact (Robinson et al., 1996).
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3.3.3 International Sales
Two international conventions referred to as the Hague Conventions 1964
governs contracts for the sale of goods between parties residing in different
countries. The United Nations Commission on International Trade Law
(UNCITRAL) has drafted a convention to replace the Hague Conventions and it
adopted at a conference in Vienna in 1980 as the Convention on Contracts for the
International Sale of Goods. It comes into operation only when the necessary
number of ratifications has been received (Vohrah and Wu, 2003).
Andersen (1998) presented a paper that focused on the meaning of the term
"reasonable time" as understood by Article 39(1) of the 1980 United Nations
Convention on Contracts for the International Sale of Goods (referred to as the CISG
or the Convention). This provision provides that a buyer notify the seller “within
reasonable time” after he discovers or ought to have discovered that the goods do not
conform to the contract. The objectivity of a term is especially important where the
CISG is concerned, as this is a uniform law which must be interpreted and practised
uniformly. The aim of the determination of "reasonable time" in Article 39(1) will
be to establish a pattern to the application of the provision, and assess whether the
term is an autonomous term applied uniformly.
Article 38 prescribes a duty for the buyer to inspect the goods delivered to
him within a short period. Since Article 39(1) relies not only on the time of
discovery of non-conformity but also on the time a buyer “ought to have discovered
it”, these two provisions are closely entwined. Indeed, Article 38 is prefatory to
Article 39. This relationship with Article 38 usually determines precisely from when
the reasonable time period is to be measured: as the time-frame of reasonable time
pertains to the period after the non-conformity is discovered (or ought to have been
discovered), it is only related to the time of delivery via Article 38. The Article 38
examination need not be carried out immediately after the delivery of the goods
57
(although this is recommendable to avoid all doubts) nor within a set time-frame, but
hurriedly according to the objective circumstances of the case.
While the purpose of the provision would seem to imply that the time-frame
should be reasonable for the seller whose interests it protects, the fact that it
represents a flexible compromise in the interests of the buyer would outweigh this
consideration. By taking “a wide range of factors” into account, and thus the
reasonableness of the time-frame in both the seller's and the buyer's point of view, a
more subjective and fair solution can be reached in each individual case. But when
applying this interpretation to a particular case, the practitioner should be aware that
a wide range of factors does not mean all factors. Not all factors are suitable for
influencing the time-frame in question. The influence of some aspects must be
considered legal misapprehensions in international trade rather than factors of
reasonableness. For instance, what if these factors include purely domestic aspects?
Many determinations of reasonable time glean their identity from the international
practice of Courts and Tribunals when determining “reasonable time” and it is
certainly here that the key is to be found. It is the actual application of the provision
which ultimately defines it.
3.4 Conclusion
The word “reasonable time” is found in, among others, Supply of Goods and
Services Act 1982, Sales of Goods Act 1957, United Nations Convention on
Contracts for the International Sale of Goods and Landlord and Tenant Act 1988.
This term is also found in construction contracts, contracts of sale and purchase of
land and charterparty.
58
According to the Law Dictionary, reasonable time is a subjective standard
based on the facts and circumstances within a particular case, with applicability in a
variety of contexts. Within commercial law, the term applies to the amount of time
in which to accept an offer, to inspect goods prior to payment or acceptance, to await
performance by a party who repudiates a contract or the time in which a seller may
substitute conforming goods for goods rejected by a buyer as non-conforming. If not
governed by statute, the term may also refer to the time allowed to set aside a default
judgment, to inform an insurance company of an accident, to file certain claims, and
to make various motions. Despite its subjectivity, it can be seen that this term is
widely used and should therefore be studied in depth.
CHAPTER 4
REASONABLE TIME WHEN TIME IS AT LARGE
4.1 Introduction
The preceding chapter elaborated on reasonable time and as Gill (1969) puts
it, in a building contract to perform a work where no particular time is specified
within which the work is to be completed, an agreement to complete within a
reasonable time will be implied and a reasonable time for completion will be
allowed.68 The question as to what is a reasonable time is one of fact69 and will be
addressed in the discussion below.
Hence, this chapter will identify and determine the meaning of “reasonable
time” when time is at large. Those meanings are based on decided court cases,
which mainly were held under England law and laws in other Commonwealth
countries.
68 Startup v Macdonald (1843), 6 Man. & G. 593, per Rolfe, B. 69 Fisher v Ford (1840), 12 Ad. & El. 654, per Lord Denman, C. J.
60
A total number of ten cases centered on what is a reasonable time were
studied, three of them were involving construction, two involving shipping, two on
carriage of goods through railway and the remaining were contracts of sales of
goods, and supply of goods and services.
4.2 Reasonable Time when Time is at Large
As have been reviewed, time at large occurs when no time of completion is
specified in the contract/where the contract is silent as to time and where the
stipulated date has ceased to be applicable by reason of prevention or breach. The
obligation is then to complete the works within a reasonable time. Therefore,
through the analysis of courts’ judgments, the meaning as to “reasonable time” can
be divided to reasonable time where no time for completion is specified in the
contract and reasonable time where the stipulated date has ceased to be applicable by
reason of prevention or breach.
4.2.1 Reasonable Time Where No Time for Completion is specified in the
Contract/Contract is Silent as to Time
Six of the ten cases are cases whereby the time for completion is not
stipulated in the contract. These cases are discussed in detail to give a background of
the cases and then what the judges say about reasonable time in such cases. One
well-known case is Pantland Hick v Raymond & Reid70. In this case, a consignee,
upon whom rested the contractual obligation to unload the appellant’s vessel, and
70 [1893] AC 22.
61
where no time for discharge was stipulated, argued that it had discharged a vessel
within a reasonable time having regard to the fact that there had been a single cause
of delay, being a strike of dock workers over which the consignee had no control and
which prevented performance of the contract.
The appellant contended that the test is what time would have been required
for the discharge of the vessel in ordinary circumstances, and to the extent that the
respondents had to provide labour, they must be responsible if the discharge is
delayed this point. The respondents argued that the test to be applied is what was
reasonable under existing circumstances assuming that, in so far as the circumstances
were extraordinary, they were not due to any act or default on the part of the
respondents.
Lord Herschell LC stated:
The only sound principle is that the ‘reasonable time’ should depend
on the circumstances which actually exist. If the cargo has been taken
with all reasonable dispatch under those circumstances I think the
obligation of the consignee has been fulfilled. When I say the
circumstances that actually exist, I, of course, imply that in those
circumstances, in so far as they involve delay, have not been caused or
contributed to by the consignee.
In the same case Lord Watson said:
When the language of a contract does not expressly, or by necessary
implication, fix any time for the performance of a contractual
obligation, the law implies that it shall be performed within a
reasonable time. The rule is of general application, and is not confined
to contracts for the carriage of goods by sea. In the case of other
contracts the condition of reasonable time has been frequently
62
interpreted; and has invariably been held to mean that the party upon
whom it is incumbent duly fulfils his obligation, not withstanding
protracted delay, so long as such delay is attributable to causes beyond
his control, and he has neither acted negligently nor unreasonably.
A common carrier of goods is not, in the absence of a special contract, bound
to carry within any given time, but only within a time which is reasonable, looking at
all the circumstances of the case; and he is not responsible for the consequences of
delay arising from causes beyond his control. The defendants, a railway company,
were prevented, by an unavoidable obstruction on their line, from carrying the
plaintiff's goods within the usual (a reasonable) time. The obstruction was caused by
an accident resulting solely from the negligence of another company who had, under
an agreement with the defendants, sanctioned by act of parliament, running powers
over their line. It was held in this case of Taylor v The Great Northern Railway
Company71 that the defendants were not liable to the plaintiff for damage to his
goods caused by the delay.
In the case of The Lyle Shipping Company Ltd v The Corporation of Cardiff72,
by a charter a cargo was to be “discharged with all reasonable dispatch as
customary”. The custom at the port was to discharge into the railway wagons.
Without any negligence on the part of the charterers, but owing to the stress of work,
and a consequent deficiency in the number of wagons available, the ship was delayed.
It was held by the Court of Appeal, that the charterers, having done their best to
procure the appliances that were customarily used for discharging such a ship, and
having used them with proper dispatch, were not liable for delay.
Smith LJ stated:
Now, the contract which the plaintiffs have in this case with the
defendants for the discharge of the cargo, as will be seen from the 71 [LR] 1 CP 385. 72 [1900] 2 QB 638.
63
latest authority upon the subject in the House of Lords - no fixed time
being stipulated for the discharge - is that the plaintiffs will discharge
the cargo within a reasonable time under existing circumstances, or, in
other words, with all due diligence having regard to all the existing
circumstances, and, in my opinion, there is no limit as to what are
existing circumstances, as argued by the plaintiff - namely, the limit of
the user of the port appliances. The case to which I allude is that of
Hick v. Raymond in the House of Lords, and when what is therein laid
down is understood it will be seen that the defendants' contract is what
I have said it is.
In the case of Sims & Co. v Midland Railway Co.73, perishable goods were
consigned by the defendants' railway for delivery to the plaintiffs, no time being
specified within which the goods were to be delivered. During the transit a general
strike of railway servants, including the defendants' servants, broke out, and the
defendants were unable to forward the goods to their destination. There was no
evidence that the strike was caused or contributed to by the defendants. The goods
becoming deteriorated the defendants sold them. In an action to recover damages for
breach of contract, to deliver the goods, it was held that in calculating what was a
reasonable time for delivery in accordance with the principle laid down in Hick v
Raymond & Reid74, the strike of the defendants' servants must be taken into
consideration as one of the circumstances existing at the time of the carriage, and that
therefore the defendants were not liable for the delay.
In the course of his judgment Ridley, J., having cited the passages from Lord
Herschell's judgment in Hick v. Raymond & Reid:
It is not right to say that, because a strike of the servants of the
defendants, who are under a duty to deliver the goods, causes the
delay, it follows that the cause of delay is one within the defendants'
73 [1913] 1 KB 103. 74 Supra note 70.
64
control, and that they are liable for it. I can imagine a case in which it
might be said that the happening of the strike was within the control of
the railway company; but there ought to be evidence of it. Apart from
such evidence the mere fact that there was a strike among the railway
company's servants causing the delay would not make the company
liable; but the strike would be an existing circumstance in the
ascertainment of a reasonable time. I do not say how the matter would
have stood if there had been evidence that the strike was brought about
by some unreasonable demand on the part of the railway company.
There was no such evidence.
In British Steel Corporation v Cleveland Bridge & Engineering Co Ltd75 the
defendants successfully tendered for the fabrication of steel work in the construction
of a building. The design required steel beams to be joined to a steel frame by means
of steel nodes. The plaintiffs, who were iron and steel manufacturers, were
approached by the defendants to produce a variety of cast-steel nodes for the project.
Two main areas of dispute developed between the parties. First, was there any
binding contract between the parties at all, under which the nodes were delivered?
Cleveland Bridge & Engineering (CBE) contended that there was such a contract,
which was to be found in certain documents (including a letter of intent issued by
CBE) and the conduct of British Steel Corporation (BSC) in proceeding with the
manufacture of the nodes. BSC's primary contention was that no binding contract
was ever entered into, and that they were entitled to be paid a reasonable sum for the
nodes on a quantum meruit, a claim sounding not in contract but in quasi contract.
The motives of the parties in putting their cases in these different ways lay primarily
in the fact that, unless there was a binding contract between the parties there was no
legal basis for CBE's counterclaim for damages in respect of late delivery or delivery
out of sequence. So far as delivery was concerned, CBE's submission was that BSC's
obligations, under the contract alleged by them to have come into existence, was to
deliver the goods in the requested sequence and within a reasonable time.
75 [1984] 1 All ER 504, 24 Build LR 94.
65
The first issue is concerned therefore with an analysis of the legal relationship
between the parties. The second issue is whether, if CBE are right in their
submission that there was a binding contract as alleged by them, BSC were in breach
of that contract in delivering the goods late and out of sequence. This latter issue is
concerned primarily with consideration of the various events and difficulties which
occurred in production of the nodes by BSC, and deciding whether, in the light of
these events, BSC failed to deliver the goods within a reasonable time as alleged by
CBE.
It was held that the parties had ultimately been unable to reach final
agreement on the price or other essential terms, thus, the contract was eventually not
entered into and therefore the work performed in anticipation of it was not referable
to any contractual terms as to payment or performance. On the question of delivery
within a reasonable time, Goff J stated that:
The question of what constituted a reasonable time had to be
considered in relation to the circumstances which existed at the time
when the contractual services were performed, but excluding
circumstances which were under the control of the party performing
those services. As I understand it, I have first to consider what would,
in ordinary circumstances, be a reasonable time for the performance of
the relevant services and I have then to consider to what extent the
time for performance by BSC was in fact extended by extraordinary
circumstances outside their control.
His Lordship then considered the evidence and concluded that a reasonable
period for the manufacture of the 137 nodes, which were at the request of CBE, was
55 weeks and that since such a period would have gone well beyond 11 April 1980
when the last node was in fact delivered it followed that if, contrary to his Lordship's
previously expressed opinion, BSC had been bound to complete the work within a
reasonable time they would not have been in breach of that obligation. (All but one
66
of the nodes had been delivered, delivery of the remaining node being held up until
11 April 1980 due to an industrial dispute at the plaintiffs' plant.)
The case of Astea (UK) Limited v Time Group Limited76 warns of the dangers
of entering into a contract without setting express deadlines for completion - in
particular when attempting to rely on the law which says that performance must be
carried out “within a reasonable time”. In July 2000, Astea entered into a contract
with Time Group, a computer retailer, to supply Time with software for its customer
call centre. Owing to delays on both sides, the integration and testing of the new
software was delayed and Time withheld payment to Astea on the basis that it was in
breach of section 14(1) of the Supply of Goods and Services Act 1982 because it had
not performed the software contract within “a reasonable time” and had repudiated
the contract by failing to complete the work by 6 March 2001. Time argued that
“reasonable time” meant that Astea had to complete the services as fast as was
humanly or technically possible, subject only to delays that it could not control.
However, the Technology and Construction Court ruled there was no express term to
complete the work by 6 March 2001 and the implied term under s14(1) of the
Services Act applied. Therefore Astea had not exceeded a reasonable time for
performance and Time was ordered to pay. In order for Time's argument to have
some credibility, it needed to issue Astea with a written notice setting out a new
deadline for performance and making "time of the essence", which it did not do.
Both counsel for the defendant and plaintiff endeavoured to seek support for their
respective emphases from the well-known decision of the House of Lords in
Pantland Hick v. Raymond & Reid77.
From the six cases discussed above, the considerations of what is a
reasonable time are given below:
- A reasonable time looking at all the circumstances of the case.
76 Supra note 59. 77 Supra note 70.
67
- Reasonable under the existing circumstances, assuming that those circumstances,
in so far as they involve delay, are not caused or attributed to by him.
- The condition of reasonable time has been frequently interpreted; and has
invariably been held to mean that the party upon whom it is incumbent duly fulfils
his obligation, not withstanding protracted delay, so long as such delay is
attributable to causes beyond his control, and he has neither acted negligently nor
unreasonably.
- Perform with all due diligence having regard to all the existing circumstances, and
there is no limit as to what are existing circumstances.
- What constitutes a reasonable time has to be considered in relation to
circumstances which existed at the time when the contract obligations are
performed, but excluding circumstances which were under the control of the
contractor. What in ordinary circumstances was a reasonable time for
performance and then considering to what extent the time for performance of the
contractor was in fact extended by extraordinary circumstances outside his control.
- Consideration of a reasonable time for performance is likely to include taking into
account any estimate given by the performing party of how long it would take him
to perform.
- The focus of attention in considering reasonable time is likely to be upon the
allocation of resources to performance of the relevant contractual obligations.
A common consideration as to what constitutes a reasonable time in all the
cases stated is a reasonable time looking at all the circumstances of the case. Lord
Ashbourne said in the case of Pantland Hick v. Raymond & Reid78:
78 Supra note 70.
68
What is the meaning of this expression “reasonable time”? It is
obvious that “reasonable” cannot mean a definite and fixed time. It
would not be “reasonable” if it was not sufficiently elastic to allow the
consideration of circumstances, which all reason would require to be
taken into account. The appellant accordingly admits that the
consignee has a right to have all ordinary circumstances taken into
account, but insists that all extraordinary circumstances are to be
excluded from consideration. Is this distinction sound, and does it rest
upon any real principle? If the consignee does all he can, is not his
conduct reasonable? If by circumstances absolutely outside his control
he can do nothing, is his inaction unreasonable? If it is reasonable to
consider some circumstances outside his control in favour of the
consignee, why are not all circumstances in the events which actually
happen, and which he cannot control, also to be taken into account? In
considering how to ascertain “reasonable time”, must not the question
come in, whether the consignee in the circumstances which eventuated
acted unreasonably? If throughout the consignee acted reasonably, if
he did all he could, if he omitted nothing that he should have done,
why should all the circumstances be arbitrarily divided into ordinary
and extraordinary for the purpose of putting a narrow and artificial
meaning upon the words “reasonable time”?
4.2.2 Reasonable Time where the Stipulated Date has ceased to be Applicable
by Reason of Prevention or Breach
The remaining four cases are cases whereby the stipulated date for completion
in the contract has ceased to be applicable by reason of acts of prevention or breach.
Where, as a condition of its performance, time is of the essence of a contract for the
sale of goods and, on the lapse of the stipulated time, the buyer continues to press for
delivery, thus waiving his right to cancel the contract, he has a right to give notice
69
fixing a reasonable time for delivery, thus making time again of the essence of the
contract, which, if not fulfilled by the new time stipulated, he will then have the right
to cancel. The reasonableness of the time fixed by the notice must be judged as at the
date when it is given. In similar circumstances, in the case of a contract for work and
labour done, the person who has ordered the work can give a valid notice to the
contractor making, time again of the essence of a contract. A reasonable time meant,
in accordance with well-known authorities, a reasonable time in the circumstances as
they actually existed, that is, that the plaintiffs would not exceed a reasonable time if
they were prevented from delivering by causes outside their control, such as strikes or
the impossibility of getting parts, and events of that kind; and that on the evidence in
this case it could not be said that a reasonable time was in that sense exceeded.79
Reasonable time has to be considered in the light of the circumstances which
prevailed after the contract. One has to consider what is the reasonable time provided
for. There were two things that the buyers had to do in this case. First, they had to
provide some sterling. They might have made an arrangement that they were merely
to pay in sterling. In that case they would merely have had to provide themselves
with the foreign currency; but they made an arrangement that they were to pay by
letter of credit. So that they had two things to do, the letter of credit being in sterling:
they had to get the sterling and they had to arrange for a letter of credit. The sterling
is the currency in which they are buying and that is what they had first to provide.
What the time provided for, the few weeks or the reasonable time, was for the
machinery of getting the letter of credit. It was not provided for, or intended to be
used for, obtaining the sterling.80
In CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors81 it was
stated that in order to establish a time at large argument, it requires two-stages, that
are establishing that there was an act of prevention by the Respondent which caused
delay and that the delay is not covered by the extension of time provision. The
79 Rickards v Oppenheim [1950] 1 KB 616 80 Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd [1955] 1 Lloyd’s Rep. 303 81 [2001] HKCU 916.
70
Respondent has admitted it was in breach of Contract in delaying of payment of the
Interim Certificates (Nos. 12 to 17). The Claimant says that Clause 23 of the
Contract does not cover such default by the Employer.
In this time at large issue, it was found that the Claimant was delayed by the
Respondent’s lack of payment as they depended very heavily on these interim
payments. There were admitted late payments running into millions of dollars. An
act of prevention by the Respondent sets time at large and that the Respondent is not
entitled to deduct liquidated damages and it now has a reasonable period in which to
finish the Works. A reasonable time for the completion of the Works is calculated.
In calculating this time, the Claimant is entitled to rely on the effects of non-payment
and late payment of interim payments.
In the case of Shawton Engineering Ltd v DGP International Ltd 82, the
appellant, Shawton Engineering Ltd, was the sub-contractor to a joint venture, KAT
Nuclear for the design and manufacture of a number of packages as part of the
construction of premises and process plant at Sellafield for handling nuclear waste.
The appellant sub-contracted the design work of five of these packages (numbered
S468, S469, S511, S512 and S514) to the respondent, DGP International Ltd. The
sub-contract for each package originally had a fixed completion date. In the event, in
one of the contracts, there were variations instructed before and after the original
completion date. On the other four contracts, the variations were all instructed after
the original completion dates. By October 2000, the respondent was being asked to
explain the reason for the delay. By letter dated 7 November 2000, the appellant said
that it had to insist that within seven days the respondent provide it with an acceptable
timeframe for completion of all contract works. Eventually, the respondent had not
completed its work on any of the packages and the appellant terminated or purported
to terminate the contracts. The appellant claimed against the respondent for breach of
contract. There was no contractual mechanism for extending time on account of the
variations. The parties agreed and HHJ Gilliland QC accepted that the effect of the
82 [2005] EWCA Civ 1359.
71
variations was that the respondent became obliged to complete its work within a
reasonable time.
It was held that what was a reasonable time had to be judged as at the time
when the question arose in the light of all relevant circumstances. One such
circumstance was that the respondent had originally agreed fixed time periods
(although upon a misapprehension as to the work content); another was the true work
content. These worked in opposite directions. The mere instruction of a variation
after the original date for completion would not by itself necessarily mean that a
reasonable time had to be assessed afresh by reference only to the variation and
whatever work happened to remain at the date of the variation (which is what the
judge appeared to say); it was possible that a modest variation instruction given after
an original completion date had passed could, depending on all the circumstances,
result in an obligation to complete by a date in the past. However, the question was a
composite one, and the circumstances here included that the variations were
significant in scope and that the appellant was not insisting on, nor particularly
concerned about, early completion of the respondent's work. The original completion
dates and periods had cased to be of any relevance. This overlaid to extinction any
question of calculating time periods by reference to the original dates for completion
and the work content of variations. The judge was right to hold that the appellant had
not established what was a reasonable time for completion; and that, on 7 November
2000, the reasonable time for completion was to be assessed afresh, mainly with
reference to the outstanding work content including variations. Therefore, the
respondent was not in breach for delay on 7 November 2000 and the appeal failed.
From the four cases discussed above, the considerations of what is a
reasonable time are given below:
- A reasonable time meant, a reasonable time in the circumstances as they actually
existed
72
- Effects of acts of prevention by Employer can be considered in calculating a
reasonable time for completion
- The fact that the experts had agreed what was an appropriate extension of time
together with the originally agreed period was a fair indication of what should be
regarded as a reasonable time for completion of the work, but that is in effect to
treat the originally agreed period as being a reasonable period
The following tables (Table 4.1 and Table 4.2) summarize all the cases
discussed above and give a clearer view on the explanation and meaning of
“reasonable time” for each case and as well as the type of contracts involved.
73
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time
No
Cases
Explanation and Meaning of “Reasonable Time”
Type of Contract/ Contractual Relationship
1 Taylor v The Great Northern Railway Company [LR] 1 CP 385
- Reasonable time means a reasonable time looking at all the circumstances of the case.
- Circumstance in the case: carrying goods on the railway company’s line within the usual (a reasonable) time was unavoidably obstructed.
Carriage of goods/ Owner of Goods
and Railway Company
2 Pantland Hick v Raymond & Reid [1893] AC 22
- Lord Watson said that when the language of a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. The rule is of general application, and is not confined to contracts for the carriage of goods by sea. In the case of other contracts the condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, not withstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably.
- Within a time which is reasonable under the existing circumstances, assuming that those circumstances, in so far as they involve delay, are not caused or attributed to by him.
- Circumstance in the case: unloading of cargo was interrupted by a strike of the dock labourers which delayed the discharge.
Shipping/ Shipowner and
Consignee
74
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
Type of Contract/ Contractual Relationship
3 The Lyle Shipping Company Ltd v The Corporation of Cardiff [1900] 2 QB 638
- No fixed time being stipulated for the discharge - is that the plaintiffs will discharge the cargo within a reasonable time under existing circumstances, or, in other words, with all due diligence having regard to all the existing circumstances, and there is no limit as to what are existing circumstances - namely, the limit of the user of the port appliances.
Shipping/ Shipowner and
Charterer
4 Sims & Co. v Midland Railway Co. [1913] 1 KB 103
- Reasonable time under the existing circumstances - Circumstance in the case: a general strike of railway servants,
including the defendants' servants, broke out, and the defendants were unable to forward the goods to their destination.
Carriage of goods/ Purchaser of goods
and Railway Company
75
Table 4.1: Reasonable time where no time for completion is specified in the contract/contract is silent as to time (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
Type of Contract/ Contractual Relationship
5 British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504, 24 Build LR 94.
- What constitutes a reasonable time has to be considered in relation to circumstances which existed at the time when the contract obligations are performed, but excluding circumstances which were under the control of the contractor.
- These principles are applied by first considering what in ordinary circumstances was a reasonable time for performance and then considering to what extent the time for performance of the contractor was in fact extended by extraordinary circumstances outside his control. Whether a reasonable time has been taken to do the works cannot be decided in advance, but only after the work has been done.
Supply of Material in Construction/
Steel manufacturer and Contractor
6 Astea (UK) Limited v Time Group Limited [2003] EWHC 725 (TCC)
- His Honour Judge Seymour thinks that consideration of a reasonable time for performance “... is likely to include taking into account any estimate given by the performing party of how long it would take him to perform…”
- The focus of attention is likely to be upon the allocation of resources to performance of the relevant contractual obligations. In any sphere of commercial or personal life it is necessary for decisions to be made as to the relative priority of matters which need to be dealt with and as to the resources which it is appropriate to allocate to such matters.
- It would be wrong in principle to proceed that an obligation to do something within a reasonable time was equivalent to an obligation to do it as soon as was practicably possible, subject only to not being held responsible for causes of delay without one’s control.
Supply of Goods and Services/ Provider of
Software and Manufacturer and
Retailer of Computers
76
Table 4.2: Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach
No
Cases
Explanation and Meaning of “Reasonable Time”
Type of Contract/ Contractual Relationship
1 Rickards v Oppenheim [1950] 1 KB 616
- A reasonable time meant, a reasonable time in the circumstances as they actually existed, that is, that the plaintiffs would not exceed a reasonable time if they were prevented from delivering by causes outside their control, such as strikes or the impossibility of getting parts, and events of that kind; and that on the evidence in this case it could not be said that a reasonable time was in that sense exceeded.
Sales of Goods/ Motor trader and
Purchaser
2 Etablissements Chainbaux S.A.R.L. v Harbormaster Ltd [1955] 1 Lloyd’s Rep. 303
- Reasonable time has to be considered in the light of the circumstances which prevailed after the contract. One has to consider what is the reasonable time provided for.
Sales of Goods/ Buyer and Seller of
marine engines
77
Table 4.2: Reasonable time where the stipulated date has ceased to be applicable by reason of prevention or breach (cont’d)
No
Cases
Explanation and Meaning of “Reasonable Time”
Type of Contract/ Contractual Relationship
3 CCECC (HK) Ltd v Might Foundate Developement Ltd & Ors [2001] HKCU 916.
- A reasonable time for the completion of the Works is calculated. In calculating this time the Claimant was entitled to rely on the effects of non-payment and late payment of interim payments (Acts of prevention by Employer).
Construction Contract/
Contractor and Employer
4 Shawton Engineering Ltd v DGP International Ltd [2005] EWCA Civ 1359
- It was submitted that the fact that the experts had agreed what was an appropriate extension of time together with the originally agreed period was a fair indication of what should be regarded as a reasonable time for completion of the work, but that is in effect to treat the originally agreed period as being a reasonable period, notwithstanding that that period was agreed to under misapprehension
- Assessing a reasonable time meant having regard to all the circumstances, one of which was that the true work content which the respondent undertook was far greater than it had anticipated. What was a reasonable time had to be judged as at the time when the question arose in the light of all relevant circumstances. One such circumstance was that the respondent had originally agreed fixed time periods (although upon a misapprehension as to the work content)
Construction Contract/
Subcontractor and Sub subcontractor
78
4.3 Conclusion
From the findings, it can be concluded that in the absence of a stipulated
period, calculating what would be a reasonable time for performance of the relevant
services can take into consideration the allocation of resources to performance of the
relevant contractual obligations. Different sized contractors can be expected to have
different resources at their disposal and it is reasonable to suppose that resources and
productivity will be essential factors to be considered. As in the case of Astea (UK)
Limited v Time Group Limited83 Judge Seymour accepted that the plaintiff’s
resources were an important concept, saying:
The focus of attention is likely to be upon the allocation of resources
to performance of the relevant contractual obligations. In any sphere
of commercial or personal life it is necessary for decisions to be made
as to the relative priority of matters which need to be dealt with and as
to the resources which it is appropriate to allocate to such matters. It
would be wrong in principle to proceed that an obligation to do
something within a reasonable time was equivalent to an obligation to
do it as soon as was practicably possible, subject only to not being held
responsible for causes of delay without one’s control.
Judge Seymour also seemed to think that consideration for a reasonable time
for performance “…is likely to include taking into account any estimate given by the
performing party of how long it would take him to perform…”. Such estimated
completion period would be a reasonable point from which to assess reasonable time
for performance.
83 Supra note 59.
79
In circumstances where the stipulated date has ceased to be applicable due to
prevention or breach, the original contract completion date will tend to be accepted as
a basis of reasonable time in ordinary circumstance so that the new reasonable time
for completion will be arrived at by adding such additional periods of delay as can be
shown to have been caused by the prevention as seen in CCECC (HK) Ltd v Might
Foundate Developement Ltd & Ors84. However, the problem arises when the original
completion date was not itself reasonable as stated in the case of Shawton
Engineering Ltd v DGP International Ltd85. It was submitted that the fact that the
experts had agreed what was an appropriate extension of time together with the
originally agreed period was a fair indication of what should be regarded as a
reasonable time for completion of the work, but that is in effect to treat the originally
agreed period as being a reasonable period. There was a misapprehension to the
defendant’s true work content. It is clear that DGP seriously underestimated both the
number of drawings which would be required and how long the work would take.
84 Supra note 81. 85 Supra note 82.
CHAPTER 5
CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
Previous chapters presented the literature review on time at large and
reasonable time, as well as the analysis of the caselaws leading to findings on what is
meant my “reasonable time”. This chapter concludes the findings of the research
according to the research objective. Problems encountered during the research and
the recommendations for future researches are also stated in this chapter.
5.2 Summary of Research Findings
In summary, examination of the ten caselaws leads to the following findings
on the meaning of “reasonable time”:
- Reasonable under the existing circumstances, assuming that those circumstances,
in so far as they involve delay, are not caused or attributed to by him and
excluding circumstances which were under the control of the contractor,
81
considering what in ordinary circumstances was a reasonable time for
performance and then considering to what extent the time for performance of the
contractor was in fact extended by extraordinary circumstances outside his control.
- The condition of reasonable time has been frequently interpreted; and has
invariably been held to mean that the party upon whom it is incumbent duly fulfils
his obligation, not withstanding protracted delay, so long as such delay is
attributable to causes beyond his control, and he has neither acted negligently nor
unreasonably.
- Performance is done with all due diligence having regard to all the existing
circumstances, and there is no limit as to what are existing circumstances.
- Consideration of a reasonable time for performance is likely to include taking into
account any estimate given by the performing party of how long it would take him
to perform.
- The focus of attention in considering reasonable time is likely to be upon the
allocation of resources to performance of the relevant contractual obligations.
- Effects of acts of prevention by Employer can be considered in calculating a
reasonable time for completion
- The fact that the experts had agreed what was an appropriate extension of time
together with the originally agreed period was a fair indication of what should be
regarded as a reasonable time for completion of the work, but that is in effect to
treat the originally agreed period as being a reasonable period
82
5.3 Problem Encountered During Research
The main constraint is insufficiency of time as only eight weeks is available
for carrying out this research. This caused insufficient time to search and retrieve
relevant caselaws for analysis. This limitation led to less cases being found to
support the findings. With more cases, the meaning of reasonable time can be
presented more comprehensively. Initial plans were also to search for more cases
related to construction contracts but due to time limitations, this was not possible.
5.4 Conclusion
Time at large occurs when no time of completion is specified in the contract
and where the stipulated date has ceased to be applicable by reason of prevention or
breach. The contractor’s obligation is then to complete the works within a
reasonable time. The meaning of reasonable time was presented.
As Lord Ashbourne puts it in the case of Pantland Hick v. Raymond & Reid86:
What is the meaning of this expression “reasonable time”? It is
obvious that “reasonable” cannot mean a definite and fixed time. It
would not be “reasonable” if it was not sufficiently elastic to allow the
consideration of circumstances, which all reason would require to be
taken into account.
86 Supra note 70.
83
Therefore, it is probably a question that can be determined by reference to all
the factual information available that can be provided by the various project
consultants involved, the contractor, its subcontractors and suppliers and statutory
undertakings. Given that the entire scope of the contractor’s works needs to be
considered, the full ambit of those factual matters is likely to be wide and the scope
of expertise, in identifying the activity durations applicable, will depend in some
measure upon usual practice and market conditions then prevailing in the place in
which the works were built. (Pickavance, 2005).
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