JCT Contracts: Condition Precedent

In the following case the court had to consider the construction of a condition precedent in a standard form JCT trade contract, as amended by the parties.

WW Gear Construction Ltd v McGee Group Ltd [2010] EWHC 1460 (TCC)

The employer entered into a trade contract with a trade contractor to carry out excavation and other ground works in connection with the construction of the Westminster Park Plaza Hotel. The construction manager named in the Contract was GC Project Management Ltd. The contract incorporated the JCT Trade Contract terms (TC/C) 2002 edition with Amendment No 1:2003, as further amended by the parties.

The trade contractor completed its work in about May 2009. Disputes arose between the parties in connection with payment including the trade contractor's claims for loss and expense relating to delay and disruption.

The employer referred a number of issues to adjudication, in particular the proper interpretation and application of the extension of time and loss and expense clause in the contract (clause 4.21). The adjudicator decided against the employer and considered clause 4.21 to be "devoid of meaning" and of no effect.

The employer sought a final determination from the court as to the true meaning and effect of clause 4.21. The employer argued that clause 4.21 required the trade contractor to make a timely and detailed application for loss and expense as a condition precedent to entitlement to such a claim.

The parties' amendments to clause 4.21 are shown in bold below.

Clause 4.21

"If the Trade Contractor makes written application to the Construction Manager stating that he has incurred or is likely to incur direct loss and/or expense ... because the regular progress of the Works ... has been or is likely to be materially affected ...; and if as soon as the Construction Manager is of the opinion...that the regular progress of the Works ... has been or is likely to be so materially affected ... the Construction Manager ... shall ascertain the amount of such loss and/or expense ...; provided always that: .1 the Trade Contractor's application shall be made as soon as and in any event not later than two months after it has become, or should reasonably have become, apparent to him that the regular progress of the Works ... has been or was likely to be affected ... and such application shall be formally made in writing and fully documented and costed in detail, and it shall be a condition precedent to the Trade Contractor's...

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