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Building Disputes – Time (Part 1)

Time in Building Disputes

Time is a critical factor in construction projects. Delays can lead to additional costs, both for the contractor and the owner. As such, construction contracts typically include provisions for time extensions and liquidated damages.

Time Extensions

A time extension is a contractual right for a contractor to be granted additional time to complete the work. Time extensions are typically granted for reasons beyond the contractor’s control, such as weather delays or changes in the scope of work.

To be entitled to a time extension, the contractor must typically provide notice to the owner as soon as possible after the delay occurs. The notice should include the following information:

  • The date and nature of the delay
  • The estimated impact on the project schedule
  • Any steps the contractor has taken to mitigate the delay

Liquidated Damages

Liquidated damages are a contractual provision that allows the owner to collect a specified amount of money from the contractor for each day that the project is delayed past the date for practical completion. Liquidated damages are typically used in lieu of actual damages, which can be difficult to quantify.

To be enforceable, liquidated damages must be reasonable. In other words, the amount of liquidated damages in the contract must be a fair estimate of the actual damages that the owner will likely suffer as a result of the delay.

If the contractor fails to complete the project on time, the owner may be entitled to collect liquidated damages. However, the owner must first give the contractor a written notice of default. The notice should specify the amount of liquidated damages that the owner intends to collect.

The contractor may then have the opportunity to cure the default. If the contractor cures the default within a reasonable time, the owner may not be able to collect liquidated damages.

Conclusion

Time is a critical factor in construction projects. Delays can lead to additional costs, both for the contractor and the owner. As such, construction contracts typically include provisions for time extensions and liquidated damages.

It is important to understand the terms of the contract regarding time extensions and liquidated damages. This will help to avoid disputes and ensure that the project is completed on time and within budget.

Disputes can arise about the duties and obligations of an agent; for further information please contact David Collins or Kristy Nunn from our dispute resolution and litigation team.

Liability limited by a scheme approved under Professional Standards Legislation

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