Extension of time and Liquidated Damages

Question 1

What is an extension of time?

Answer 1

A mechanism in the contract that allows an employer to extend the time in the contract by which the contractor is required to complete works.

Question 2

What is EOT short for?

Answer 2

Extension of time

Question 3

What type of construction contracts have EOTs

Answer 3

The JCT suite

Question 4

There are conditions that can triger EOTs. What is this term called?

Answer 4

Relevant Events

Question 5

What is a relevant event?

Answer 5

A defined event set out in a JCT contract that will trigger an EOT

Question 6

When is an extension of time triggered?

Answer 6

when a relevant event happens

Question 7

Under JCT when is a contractor bound to advise the client of a relevant events impact and effect?

Answer 7

Whenever reasonable and apparent - though its uncelar what recourse is available if they dont.

Question 8

What would happen if a relevant event happened (a delay not that isnt the contracts fault or owned risk) and there was no extension of time facility within the contract?

Answer 8

The completion date would change to time at large

Question 9

What is time at large?

Answer 9

Completion within reasonable time

Question 10

What are the impacts of a contract completion date becomeing time at large

Answer 10

The client is no longer entitield to liquidated damages and delay damages become more ambiguous with no specific date of completion.

Question 11

Who confirms an EOT after the contractor sends notification?

Answer 11

The CA or EA - as soon as possible and absoloutly within 12 weeks.

Question 12

Can the CA/EA retrospectivly bring a previously extened completion date back so that it was sooner?

Answer 12

Yes, they would do this to allow the client to claim more liquidated damages when there is a leitimate reason to bring it forward..

Question 13

What happens if a contractor disagrees with a CA/EAs decision surrounding an EOT

Answer 13

Dispute

Question 14

What are liquidated damages?

Answer 14

liquidated damages are pre-determined damages, calculated before damage has been incurred, that may not represent the true damage but does provide certainty of what the damages will be.

Question 15

Where does the language behind liquidated damages come from?

Answer 15

Liquidare – to make clear or certain

A latin word

Question 16

Whats the difference between liquidated and unliquidated damages?

Answer 16

Liquidated - pre-determined, clear from the start
Unliquidated - retrospective, left for the courts to decide (uncertain)

Question 17

What are the two rules for LDs to be valid?

Answer 17

1. They must represent a true and documented calculation
2. They must be a genuine pre-estimate of loss and not be a penalty

This is set out in common law regarded LD’s

An obvious sign of a penalty would be a gross misestimation of ascertained damages

Question 18

If there are no valid LDs in the contract - can the client recover other delay damages?

Answer 18

Yes - these would be unliquidated damages and would be acheived through dispute

Question 19

What is the main benefit of LDs?

Answer 19

Clear vision of what damages will be - clarity for both parties

Question 20

What is the main disadvantage of LDs?

Answer 20

Damages may not represent true damages, client could be under or over reinbursed.

Question 21

Can you name the Relevant events?

There are 14 - lol good luck

Answer 21

• 1. Changes from the employer
• 2. Employer instructions
• 3. The client not giving the site
• 4. Archaeologist on site
• 5. Suspension due to employer not paying
• 6. Impediment causing delay by employer
• 7. The fault of the state, unexpectedly needing to do or not do something
• 8. Really bad weather
• 9. If there is damage from specified peril, e.g., fire or flood, the insurance will cover the cost but there will still be time needed to remedy – this does that.
• 10. Terrorism
• 11. Industrial action
• 12. New laws
• 13. Delays from e.g., planners where contractor did everything possible to avoid.
• 14. Force majeure – an event beyond the control of the parties. E.g., covid.

Question 22

What are the benefits of EOTs?

Answer 22

• It relieves the contractor’s liability for liquidated damages for a delay that they did not cause
• It enables another completion date to be set, which maintains the employer’s ability to take liquidated damages if another delay occurs