Legal Developments In Construction Law: July 2021

• Published date: 05 August 2021
• Subject Matter: Government, Public Sector, Real Estate and Construction, Government Contracts, Procurement & PPP, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mayer Brown

1. Failure to complete in a reasonable time - could that be a repudiation?

A contract for works to modernise a 1970s house in Cheshire had no contract administrator. There were a number of variations and the works were delayed but there was no extension of time mechanism in the contract. Among other issues, the court had to decide the parties' competing claims as to repudiation. The builder said that the homeowner's refusal to confirm that it was allowed access was repudiatory, and that it accepted this repudiatory breach. The homeowner claimed, however, that the builder was in repudiatory breach of its obligation to complete the works within a reasonable time, having effectively given up on the works, and that she accepted the repudiation.

Because of the variations causing delay, and the absence of an extension of time mechanism, the contract date for completion was replaced by an obligation to complete in a reasonable time. The judge noted that what is a reasonable time must be assessed objectively by reference to all the circumstances of the case, and the homeowner had to establish what that would be, disregarding delays caused by her own failures. She could not, however, contend that the time for completion was of the essence of the contract, so that a failure to complete by the specified date enabled her, without more, to treat the contract as discharged. The contract did provide for liquidated damages but, because of the variations and no extension of time mechanism, time became "at large" and the homeowner could only claim for general damages for any delay that could be proved. So, had the builder repudiated the contract by failing to complete in a reasonable time?

The textbook Keating on Construction Contracts says that delay by the contractor, where time is not of the essence of the contract, does not amount to a repudiation unless it shows that it will not, or cannot, carry out the contract, or that the delay deprives the innocent party of substantially the whole benefit of the contract. It adds that, in most cases, it is desirable to give notice that continuing the delay will be treated as repudiation, before purporting to accept the repudiation by dismissing the contractor. On the employer's part, it is, in general, a repudiation if the employer wrongfully by its own acts, and without lawful excuse, renders completion impossible.

The court ruled that the builder had not been in repudiatory breach of contract. There had been culpable delay and defective works, but these matters were not so serious as to show that the builder would not, or could not, finish off the contract or that the delay or defects, or their combined effect, deprived the homeowner of substantially the whole benefit of the contract. The homeowner's failure, however, either to permit the builder to return to site or to confirm that she was willing to do so, was undoubtedly a repudiatory breach which the builder was entitled to, and did, accept. And even if the builder had been in repudiatory breach, the homeowner did not clearly and unequivocally convey to the builder that she was treating the contract as at an end.

Cartwright Pond Ltd v Wild [2021] EWHC 1600

2. Incorporating terms and conditions - have you done enough?

An interior design company contracted to provide goods and...