Relevant event
Delays on a project will have different contractual consequences depending on the cause of the delay:
- Where a delay which impacts on the completion date is caused by the contractor (culpable delay), the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client.
- Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay.
A relevant event may be caused by the client, or may be a neutral event such as exceptionally adverse weather. The contract should set out what constitutes a relevant event.
Relevant events may include:
- Variations.
- Exceptionally adverse weather.
- Civil commotion or terrorism.
- Failure to provide information
- Delay on the part of a nominated sub-contractor.
- Statutory undertaker’s work.
- Delay in giving the contractor possession of the site.
- Force majeure (events that are beyond the reasonable control of a party, such as a war or an epidemic).
- Loss from a specified peril such as flood.
- The supply of materials and goods by the client.
- National strikes.
- Changes in statutory requirements.
- Delays in receiving permissions that the contractor has taken reasonable steps to avoid.
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.
Claims for extension of time can run alongside claims for loss and expense however, one need not necessarily lead to the other. The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.
Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a 'reasonable' time. The client would lose any right to liquidated damages.
NB: On NEC contracts, delays are dealt with slightly differently and are referred to as 'compensation events'.
[edit] Related articles on Designing Buildings
- Compensation event.
- Concurrent delay.
- Culpable delay.
- Delays on construction projects.
- Disruption claims in construction.
- Extension of time.
- Force majeure.
- Frustration.
- Henry Boot Construction Ltd v Alstom Combined Cycles.
- Liquidated damages.
- Loss and expense.
- Penalty.
- Prolongation.
- Relevant events v relevant matters.
- Remoteness.
- Variations.
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