03 Case Studies - Answers

Case Studies
Outline
1. Claim Based on Provision Contained in Covering Letter to Tender
2. Claim Based on Counter Offers
3. Claim Based on Subsoil Conditions
4. Claim Based on Archaeological Remains
5. Claim Based on Omissions
6. Claim Based on Taking Possession of a Building Before Completion
7. Claim Based on Liquidated Damages Payable by Subcontractors
8. Claim for Delay in Completing Sections of the Works
9. Claim where a contractor’s progress is originally behind schedule
10. Claim Based on Variations in a Delay Period
11. Claim Arising Out of Delays
12. Claim Arising Out of Delays & Prolongation Costs
13. Claim Based on Period for Calculating Prolongation Costs
14. Claim Arising out of Delays due to Errors in Designs
15. Claim for Extension of Time without Proper Notice
16. Claim for Liquidated Damages where the Employer suffers no loss
Claim Based on Provision Contained in
Covering Letter to Tender
Letter 1:
1 September 2000
Contractor to Engineer
With reference to Payment Certificate No 4 we included in our statement an item for
250 m3 of material S supplied and fixed in the Works at an extra cost of £10.20 per
m3. This item, however, was deleted. In subsequent discussion the Engineer’s
Representative contended that this was not payable as the contract is on a fixed price
basis and contains no Price Fluctuation Clause.
We would, however, draw your attention to the covering letter to our tender in
which we said that our tender was based on buying material S at X price and that if,
under the circumstances of the project, we had to get it at a higher price we would
expect to be reimbursed the extra cost.
We therefore contend we are entitled to payment of the sum of £3,060 and would
be glad if you would include this in the next certificate.
Claim Based on Provision Contained

in Covering Letter to Tender Cont.
Letter 2:
9 September 2000
Engineer to Contractor
With reference to your letter dated 1 September 2000, clearly the contract contains no
provision for price fluctuation.
I would also point out that the covering letter to your tender was in effect a
qualification, contrary to the requirements of the invitation to Tender and our
Company’s policy, which indicated that qualifications would not be permitted.
In any case you give no supporting evidence as to how the £3,060 is arrived at.
Claim Based on Provision Contained
in Covering Letter to Tender Cont.
Letter 3:
11 September 2000
In reply to your letter of 9 September, we are aware that it is your Company's policy to
discourage qualified tenders but there are occasions when a qualification is
unavoidable. In this case we were not sure we will be able to get material S at X
price, thus we considered that if we were to meet your requirements as to date for
completion, we might have to get material S at a higher rate. As we did not wish to
load our tender against a risk which might not eventuate we decided we had no
alternative but to qualify our tender.
In fact, we were not able to get material S at X price. We enclose copies of invoices for
the materials delivered and the quotations on which we based our tender. From
these you will see that the net difference is £/0.20 per m3 to which we have added
20 per cent for overheads and profit - which we are sure you will agree is very
reasonable.
As a judge, draft your opinion. Explain your answer.
Claim Based on Provision Contained in

Covering Letter to Tender Cont. – Held
The contractor’s claim fails if the Letter of Tender was not
included as part of the Contract Documents.
The contractor’s claim succeeds if the Tender was accepted
without qualifications or if the Letter of Tender was included as
part of the Contract Documents.
Claim Based on Counter Offers
Relevant Information:
Invitation to tender for a building project dated November 2001 required completion
within 21 months.
Tender dated 11 November 2001 offered to carry out the work for £104,000 but in a
time of 24 months and required the inclusion of price fluctuation provisions.
Letter 1:
23 November 2001
I have to inform you that your tender dated 11 November 2001 is accepted in the sum
of £104,000 less £2,214 in respect of arithmetical errors in the Bill of Quantities. It is
agreed that the time for completion is to be 24 months but your request for price
fluctuation provisions to be included is not accepted.
Further I must point out that some of your Preliminary Items are grossly overpriced.
These must be reduced and the excess distributed over the remaining BOQ items.
You are hereby given a notice to commence within 14 days from the date of this letter.
Claims Based on Counter Offers

Letter 2:
26 November 2001
Thank you for your letter dated 23 November 2001. We regret, however, that we are
unable to agree to this contract being on a firm price basis at the price quoted. If
the inclusion of price fluctuation clauses cannot be agreed to, we would need to
increase our price by £20,000.
Letter 3:
3 December 2001
With reference to your letter dated 26 November, I have been instructed to inform you
that your request to increase your tender by £20,000 is not acceptable. It is
therefore intended to revert to your original tender including price fluctuation
provisions. I am instructed to inform you that that tender is hereby accepted in the
sum of £104,000 less £2,214 in respect of arithmetical errors and subject to a
redistribution of the excessive prices for preliminaries referred to in my letter dated
23 November 2001 which letter is now cancelled.
Claims Based on Counter Offers
Letter 4:
8 December 2001
Thank you for your letter dated 3 December 2001. It is regretted that we cannot agree to
proceed with this contract on the basis of your letter; to redistribute the Preliminary
Items as you require would involve us in additional costs of finance.
We are, however, prepared to stand by the offer contained in our letter dated 26 November
2001 to execute the work for the sum of £124,000 on a firm price basis.
Letter 5:
14 December 2001
I am instructed to inform you that my client considers there is a binding contract with you
and you are accordingly requested to proceed without further delay.
After about three weeks from the last letter the Contractor did started work on the site,
variations were issued and interim payments made. A claim arose related to the Contract
Price. The Engineer contended that the Contract Price is £104,000 less £2,214 including
price fluctuation provisions, whereas the Contractor contended that the Contract Price is
£124,000 on a firm price basis.
As a judge, draft your opinion. Explain.
Claims Based on Counter Offers – Held

In situations such as this where there is offer, counter-offer and counter-
counter-offer etc, there can easily be a doubt as to the point at which a
contract comes into being, and hence as to its terms. In this case there is
evidently a contract as work was performed and monies paid. At what point
can it be said there must have been a meeting of the minds?
Both the first and second 'acceptance' were counter-offers and by the first the
original tender was 'killed off' and so was not in any case open for
acceptance. The contractor's offer (if offer it were) was likewise killed off by
the second 'acceptance' but was effectively reiterated in the contractor's
letter of 8 December. The Engineer's final letter of 14 December was
anything but clear but by this time there was no offer on the table except
that by the contractor of 8 December 2001, and by allowing work to
proceed and by making payments, the employer indicated acceptance, if the
Engineer's letter of 14 December had not already done so. Thus, the
Contract Price is held to be £124,000 on a firm price basis.
Claims Based on Counter Offers – Held
Comments:
Such situations can be avoided by resolving all matters, redistribution of
money in Preliminary Items, the fluctuation provision, or indeed any other
matters requiring to be resolved before a tender is accepted, and then
accepting it in simple terms without introducing any new matter.
Arithmetical errors should be dealt with before acceptance and the contractor
should be offered the choice of adhering to, amending or withdrawing his
tender.
Claim Based on Subsoil Conditions

The contract was for the construction of an underpass on a road adjacent to a
river.
Tender dated 8 January 2000. Time for completion: 2.5 years.
Acceptance dated 11 February 2000.
The Tender Documents included a Report on Site Investigations based on bore
holes taken by a specialist contractor. There was a disclaimer concerning
this information, as follows:
“Site investigations consisting of bores have been carried out by ... and a
copy of their Report together with samples taken from the bore holes have
been included in the Tender Documents. Such information is given without
guarantee and the Employer shall not be held responsible for any
inaccuracy in the same”.
The Conditions of Contract included the following provisions:
Clause 11:
“The Employer shall have made available to the Contractor for his information
all relevant data in the Employer's possession on sub-surface conditions at
the Site, including environmental aspects. The Contractor shall be
responsible for interpreting all such data.
To the extent which was practicable (taking account of cost and time), the
Contractor shall be deemed to have obtained all necessary information as to
risks, contingencies and other circumstances which may influence or affect
the Tender or Works. To the same extent, the Contractor shall be deemed to
have inspected and examined the Site, its surroundings, the above data and
other available information, and to have been satisfied before submitting
the Tender as to all relevant matters.
The Contractor shall be deemed to have satisfied himself as to the correctness
and sufficiency of the Contract Price and have based the Contract Price on
the data, interpretations, necessary information, inspections, examinations
and satisfaction as to all relevant matters”.

Clause 12:
“If the Contractor encounters adverse physical conditions which he considers
to have been unforeseeable, the Contractor shall give notice to the Engineer
as soon as practicable. This notice shall describe the physical conditions, so
that they can be inspected by the Engineer, and shall set out the reasons
why the Contractor considers them to be unforeseeable. The Contractor
shall continue executing the Works, using such proper and reasonable
measures as are appropriate for the physical conditions, and shall comply
with any instructions which the Engineer may give. If and to the extent that
the Contractor suffers delay and/or incurs cost due to these conditions, and
it is considered that such conditions were not foreseeable by an
experienced contractor, the Contractor shall be entitled such extension of
time for the delay and/or payment of such additional cost he incurred”.
Clause 13:
“All fossils, coins, articles of value or antiquity, and structures and other
remains or items of geological or archaeological interest found on the Site
shall be placed under the care and authority of the Employer. The
Contractor shall take reasonable precautions to prevent Contractor's
Personnel or other persons from removing or damaging any of these
findings.
The Contractor shall, upon discovery of any such finding, promptly give notice
to the Engineer, who shall issue instructions for dealing with it. If the
Contractor suffers delay and/or incurs Cost from complying with the
instructions, the Contractor shall be entitled such extension of time for the
delay and/or payment of such additional cost he incurred”.
In this case, the material to be excavated proved to be much more difficult

than the contractor had expected and he submitted a claim.

Letter 1:
13 June 2000
As has been discussed at length at several progress meetings on site, the excavation
for this underpass is proving very much more difficult than we expected. It is much
more expensive to excavate, requires much larger steel sheet piling than expected
to retain the ground in the centre section and continuous pumping.
We therefore formally claim to be paid the extra cost involved.
Letter 2:
18 June 2000
In reply to your letter of 13 June, I cannot accept that the ground conditions being
encountered are any worse than should have been anticipated by an experienced
contractor. When tendering you had the opportunity to inspect the Report on Site
Investigations and also the bore samples.
I regret I am unable to agree that you get paid the extra costs.
Letter 3:
26 June 2000
We were surprised at the contents of your letter of 18 June, particularly at the
implication that we are not experienced contractors. We have had many years'
experience in civil engineering work more complicated than the present project. The
conditions in this Site are different and more severe than expected, thus we incurred
extra costs.
We should be glad if you would reconsider the matter.
Letter 4:
2 July 2000
With reference to your letter of 26 June, you have misconstrued my intentions in
making reference to 'an experienced contractor'. All I was intending to do was to
draw your attention to the terms of Clause 12 of the Conditions.
In any case, your attention is drawn to the disclaimer in the Tender Documents.
Claim Based on Subsoil Conditions -

Held
o Under the subject contract, the risk of unforeseeable physical
conditions is allocated to the Employer.
o The disclaimer here does not transfer the risk to the Contractor.
Even, if the Contractor does the boreholes, while it may be
possible to investigate and establish the properties of the sub-
soil at certain locations and extrapolate from that an overview
of the whole site, the actual ground conditions for the whole of
the works can only be established when the contractor
excavates.
Claim Based on Archaeological
Remains
The contract was for the construction of an underpass on a road adjacent to a
river.
Tender dated 8 January 2000. Time for completion: 2.5 years.
Acceptance dated 11 February 2000.
The Tender Documents included a Report on Site Investigations based on bore
holes taken by a specialist contractor. There was a disclaimer concerning
this information, as follows:
“Site investigations consisting of bores have been carried out by ... and a
copy of their Report together with samples taken from the bore holes have
been included in the Tender Documents. Such information is given without
guarantee and the Employer shall not be held responsible for any
inaccuracy in the same”.
Claim Based on Archaeological Remains

Clause 11:
“The Employer shall have made available to the Contractor for his information
all relevant data in the Employer's possession on sub-surface conditions at
the Site, including environmental aspects. The Contractor shall be
responsible for interpreting all such data.
To the extent which was practicable (taking account of cost and time), the
Contractor shall be deemed to have obtained all necessary information as to
risks, contingencies and other circumstances which may influence or affect
the Tender or Works. To the same extent, the Contractor shall be deemed to
have inspected and examined the Site, its surroundings, the above data and
other available information, and to have been satisfied before submitting
the Tender as to all relevant matters.
The Contractor shall be deemed to have satisfied himself as to the correctness
and sufficiency of the Contract Price and have based the Contract Price on
the data, interpretations, necessary information, inspections, examinations
and satisfaction as to all relevant matters”.
Remains Cont.
Clause 12:
“If the Contractor encounters adverse physical conditions which he considers
to have been unforeseeable, the Contractor shall give notice to the Engineer
as soon as practicable. This notice shall describe the physical conditions, so
that they can be inspected by the Engineer, and shall set out the reasons
why the Contractor considers them to be unforeseeable. The Contractor
shall continue executing the Works, using such proper and reasonable
measures as are appropriate for the physical conditions, and shall comply
with any instructions which the Engineer may give. If and to the extent that
the Contractor suffers delay and/or incurs cost due to these conditions, and
it is considered that such conditions were not foreseeable by an
experienced contractor, the Contractor shall be entitled such extension of
time for the delay and/or payment of such additional cost he incurred”.

Remains Cont.
Clause 13:
“All fossils, coins, articles of value or antiquity, and structures and other
remains or items of geological or archaeological interest found on the Site
shall be placed under the care and authority of the Employer. The
Contractor shall take reasonable precautions to prevent Contractor's
Personnel or other persons from removing or damaging any of these
findings.
The Contractor shall, upon discovery of any such finding, promptly give notice
to the Engineer, who shall issue instructions for dealing with it. If the
Contractor suffers delay and/or incurs Cost from complying with the
instructions, the Contractor shall be entitled such extension of time for the
delay and/or payment of such additional cost he incurred”.
Remains Cont.
Letter 1:
14 July 2000
I have to confirm oral instructions given on site this morning to cease work
with the excavator in the central section and continue with hand excavation
around the timbers of the ship which has been discovered. Arrangements
are being made for an archaeologist to inspect these timbers as soon as
possible.
Letter 2:
21 July 2000
I have to inform you that an inspection of the ship's timbers encountered took
place and it was found that they are of no archaeological interest and
normal work may be resumed.

Remains Cont.
Letter 3:
23 July 2000
Thank you for your letter of 21 July. We enclose herewith daywork sheets
totalling £1,487.20 for the hand excavation around the ship's timbers. The
facts have been agreed and the sheet signed by your representative.
We also wish to give notice of a claim under Clause 13 in respect of
archaeological remains (namely derelict ship's timbers) which could not
possibly have been foreseen, even by an experienced contractor. We will
prepare a claim for the delay of one week and the additional costs incurred.
Remains Cont.
Letter 4:
25 July 2000
Your daywork account in respect of hand excavation around the old ship's timbers is
grossly excessive and unacceptable.
As to your proposed claim for delay, as the remains turned out not to be
archaeological, their occurrence can only be regarded as a contractual risk.
Thus, no claim in this respect can be entertained.
Letter 5:
28 July 2000
We were astonished to receive your letter of 25 July. The labour and plant times were
all agreed with your representative.
Regarding the delay, this arose directly out of your instruction for hand excavation and
we must insist on being reimbursed the cost.
Finally, we must maintain that we have a legitimate claim for delay and extra cost.

Remains – Held
o The contractor is on a firm ground; he has an order from the
Engineer on the one hand and a clear case under Clause 13 on
the other. Thus, his claim should succeed.
o As for the records regarding the labour and plant, it was good
action from the contractor to involve the Engineer’s
representative and get his approval regarding their times.
Claim Based on Omissions
The contract was for the construction of a number of buildings
and included landscaping.
Contract Sum £4,530,210. Contract period 21 months
Work on site had been subject to a number of delays due to a
relatively large number of variations and an exceptionally
inclement weather in the autumn and winter of 2000. Instead
of being completed in February 2001, work was not even
substantially completed until October 2001. The engineer
issued a variation order omitting the whole of the landscaping
from the contract and awarded a separate contract to a
'specialist' firm for the work to be carried out in the following
year.
Claim Based on Omissions Cont.

Clause 18:
“The Employer may at any time, unilaterally, make any change in
the Works within the general scope of this Contract; including
additions, omissions or alterations of the Works. If any change
causes an increase or decrease in the cost of, or the time
required for, the execution of the Works under this Contract, an
equitable adjustment shall be made. The Contractor shall
proceed immediately with the variation and shall not delay the
performance of the Works and/or the variation(s), awaiting
agreement on the valuation of the time/cost of the
variation(s)”.
Letter 1:
21 September 2001
Variation NO 143
You are hereby requested to omit the whole of the landscaping work as Bill L and also
the associated earthworks in Bill B and drainage in Bill D as indicated on the
attached drawing.
Letter 2:
23 September 2001
We refer to Variation No 143 dated 21 September 2001 in which you ordered the
omission of the whole of the landscaping as well as some earthworks and drainage.
We notice that another contractor has appeared on site. We understand that this
firm is to undertake the landscaping work omitted from our contract. We therefore
reserve the right to claim compensation in respect of lost overheads and profit on
this work.

Letter 3:
25 September 2001
Your attention is drawn to Clause 18 which states that “The Employer may at any time,
unilaterally, make any change in the Works within the general scope of this Contract;
including additions, omissions, ….”.
Letter 4:
27 September 2001
We cannot accept your view regarding your powers under Clause 18. It is true that
work may be omitted, but only if it is in fact not required at all. Work cannot be
omitted from our contract and given to others to carry out.
Letter 5:
28 September 2001
Your claim is rejected on the basis stated in our letter dated 25 September 2001.
Claim Based on Omissions – Held
Provisions as to the architect's/engineer's powers to order
variations are in all the Standard Forms, apparently very wide.
It is, however, quite clear that the contractor is entitled to
perform all the work included in his contract. It has been held
in legal cases that where work is omitted and given to others
the contractor is entitled to claim for loss of profit, unless the
contract expressly states the opposite.
Claim Based on Taking Possession of a

Building Before Completion
The Contract undertook to construct an office building.
Commencement Date 1 January 2011. Time for completion: 18 months.
Completion Date: 30 June 2012
The Conditions of Contract included the following provision:

Clause 31:
“Substantial completion means that the works have been carried to such a stage
that they can be taken over and used by the Employer for their intended purpose
and the remaining unfinished work is very minimal and of a minor nature”.
Clause 35:
“If the Contractor fails to comply with the Completion Date, the Contractor shall pay
to the Employer as liquidated damages the percentage stated in the Contract. The
liquidated damages shall be paid for every day which shall elapse between the
contractual Completion Date and the date of substantial completion. The limit of
liquidated damages is 10% of the Contract Price”.
Building Before Completion Cont.
By the time 30 June 2012 had arrived, work was still incomplete. The main problem
was the air-conditioning, which was not fully functioning. However, the Employer
moved in on 15 July 2012. The Contractor did not finish off the incomplete items
until 25 August 2012.
Letter 1:
15 August 2012
You are hereby informed that liquidated damages will be deducted with a value
equivalent to 10% of the Contract Price.
Letter 2:
27 August 2012
We are extremely surprised to receive your letter of 15 August 2012. You have moved
in on 15 July 2012. Liquidated damages could not be deducted for the period after
that date.

Letter 3:
1 September 2012
There is no entitlement that substantial completion had occurred if work, except for
that of a very minimal and minor nature, was still outstanding. This is obviously not
the case here, since the air-conditioning was not working by 15 July 2012. Thus,
work cannot be considered substantially complete by that date. Accordingly,
substantial completion occurred when work was ready for taking over and the
remaining unfinished work is very minimal and of a minor nature, which did not
happen until 25 August 2012.
Letter 4:
3 September 2012
We cannot comprehend your situation, since you actually moved in on 15 July 2012.
Letter 5:
7 September 2012
We note that you were still engaged in finishing off the work until 25 August 2012. We
further note that there is no clause in the Contract which states that, if the employer
at any time before substantial completion of the works take possession of a part of
or the whole of the works, then substantial completion of the part or the whole of
the works taken into possession is deemed to have taken place.
As a judge, decide whether the Employer is entitled to deduct liquidated

damages up till 15 July 2012 or 25 August 2012. Explain your answer.

Building Before Completion – Held
 It would make the situation clear if the contracts state that if the
employer at any time before substantial completion of the works take
possession of a part of or the whole of the works, then substantial
completion of the part or the whole of the works taken into possession is
deemed to have taken place.
 In the absence of such wording, it is likely that, if an employer takes
possession of a building, substantial completion will be deemed to have
occurred. That is because responsibility for the part taken over rests with
the employer for such matters as damage and health and safety.
 In other words, if substantial completion is deemed to have occurred it
would not matter if the building had no roof on. In this case it was only
the air-conditioning which was not completed.
 Accordingly, substantial completion is deemed to have occurred on 15
July 2012 and liquidated damages are payable only up till 15 July 2012.
Claim Based on Liquidated Damages
Payable by Subcontractors
The contract was for the construction of a hotel.
Commencement Date: 1 February 2010. Time for completion: 24 months.
Completion Date: 31 January 2012.
Contract Price: $25,000,000 Limit of Liquidated Damages: $2,500,000
The Contractor awarded the electromechanical works to a Subcontractor. The

Subcontract Price was $5,000,000. Completion Date: 30 November 2011.
The Subcontract included the following provision: Clause 8:

“The Subcontractor shall pay to the Main Contractor as liquidated damages 1% of the
Subcontract Price for each week or part of a week of delay in completing the
Subcontract Works, beyond the Subcontract Completion Date.
If, however, as a result of such delay the Main Contractor became liable for liquidated
damages under the Main Contract, the Subcontractor will pay the amount of
liquidated damages under the Main Contract”.

Payable by Subcontractors Cont.
The progress of the work was behind schedule, for reasons for which the Subcontractor
was responsible. Instead of being completed on or before 30 November 2011, the
Subcontract works were completed on 15 April 2012.
Letter 1:
1 December 2011
Contractor to Subcontractor
You have been informed in several occasions that the progress of the Subcontract work
was behind schedule, for reasons for which you are responsible. You are hereby
informed that liquidated damages will be deducted.
The Subcontractor tried to argue that he was not responsible for part of the delay.
However, his argument was duly rejected.
Letter 2:
1 April 2012
The progress of the Subcontract work is extremely behind schedule, for reasons for
which you are responsible. Accordingly, and as you have been informed in several
occasions, the Main Contract Works have been subject to delay as well. The
Employer has decided to deduct liquidated damages from our payments. The
deducted liquidated damages will be passed down to you, as per Clause 8.
Letter 3:
5 April 2012
We would like to inform you that you are liable to pay us liquidated damages
equivalent to $2,500,000, which is the amount deducted by the Employer under the
Main Contract.

Letter 4:
10 April 2012
Subcontractor to Contractor
We have received your letter of 5 April 2012. You must have made a mistake in
calculating the value of the liquidated damages. It cannot be $2,500,000. This value
is half the Subcontract Price. This is totally out of proportion.
Letter 3:
12 April 2012
Unfortunately, the employer will levy a claim for liquidated damages against us, since
the completion of the Main Contract Works are delayed. Our delay is due to a
default on your part.
There is nothing that restricts the liquidated damages that should be payable by you.
These should be payable irrespective of the value of the subcontract works.
Payable by Subcontractors – Held
 The injured party is entitled to recover damages from the party in breach.
These damages should include only those losses which under normal
circumstances are likely to arise and are within the contemplation of both
parties.
 Subcontractors who, in breach of their subcontract, complete late will be
liable to pay the resultant damages incurred by the contractor. These
damages will include any liability the main contractor has to pay as
liquidated damages to the employer. This procedure will apply irrespective
of the value of the subcontract works.
 It is open to the subcontractor to argue, if the main contract liquidated
damages are extremely high, that the sum involved was outside his
contemplation at the time the contract was entered into.
 To preclude this type of argument main contractors, usually with the
Bidding Documents, will set out details of the main contract (including the
sum included for liquidated damages).
Claim for Delay in Completing Sections

of the Works
The contract was for the construction of four Buildings; A, B, C and D.
Commencement Date 1 January 2010. Contract Price: $1,000,000
Completion Date of Building A: 1 June 2010
Completion Date of Building B: 1 October 2010
Completion Date of Building C: 1 September 2010
Completion Date of the whole Works: 31 December 2010

Clause 15:
“The Parties agree that the Contractor shall pay to the Employer as liquidated
damages 2.5% of the Contract Price for each week or part of a week of delay in
completing the whole Works, beyond the Completion Date for the whole Works”.
of the Works Cont.
The progress of the work was behind schedule in some Buildings, for reasons for which
the Contractor was responsible. The actual Completion Dates were as follows:
Completion Date of Building A: 27 May 2010
Completion Date of Building B: 25 November 2010
Completion Date of Building C: 16 October 2010
Completion Date of the whole Works: 31 December 2010
Letter 1:
1 December 2010
You have been informed in several occasions that the progress of the work was behind
schedule in Buildings B and C, for reasons for which you are responsible. You are
hereby informed that liquidated damages will be deducted for the two Buildings.

of the Works Cont.
Letter 2:
10 December 2010
We are surprised to receive your letter of 1 December 2010. The liquidated damages
sum are given into the contract for a failure on our part to complete the whole of
the works, but no liquidated damages are included for failing to achieve the
sectional completion dates.
Letter 3:
15 December 2010
Sectional completion dates are included in the Contract. In case you complete a section
or more late, you will be liable to pay liquidated damages. However, the liquidated
damages percentage will not be applied to the full Contract Price, but to the value of
the section that is completed late.
of the Works – Held
 Contractors often include a single liquidated damages figure in respect of
the whole of the works but no liquidated damage figures for the
milestone completion dates.
 The employer will be entitled to levy a claim for liquidated damages if the
contractor fails to complete the whole of the works by the completion
date, and for unliquidated damages for a failure to complete by the
milestone dates.

of the Works – Held
 However, the employer will be required to prove the losses he has
incurred due to the contractor's failure to complete by the milestone
dates.
 In some cases, it may be impossible to show that very much loss could
be expected to result from a failure to meet the milestone dates. This
being the case the employer will be unable to apply the liquidated
damages.
 Furthermore, the employer may be challenged to demonstrate as to
whether, at the time of tender, they represented a reasonable pre-
estimate.
Claim where a contractor’s progress is
originally behind schedule
The contract was for the construction of a Waste Water Plant.
Commencement Date 10 December 2010. Time for completion: 24 months.

Clause 15:
“The Contractor shall be entitled to an extension of time if and to the extent that
completion is or will be delayed due to a variation, delayed drawings or instructions,
errors in drawings, changes in legislation, unforeseeable physical conditions,
exceptionally adverse climatic conditions, any delay or prevention attributable to the
Employer, or the Employer's other contractors on the Site”.

originally behind schedule Cont.
The progress of the work was behind schedule, for reasons for which the Contractor
was responsible. Works were supposed to be completed in December 2012. Instead
of being completed in December 2012, work was not even substantially completed
until February 2013. In January 2013, works where affected by exceptionally
adverse weather.
Letter 1:
10 February 2013
We refer to the exceptionally adverse weather encountered on Site in January 2013
and serve a notice for extension of time of three weeks.
Letter 2:
20 February 2013
Works should have been completed in December 2012. However, work is delayed due
to reasons for which you are responsible. Accordingly, you are not entitled for
extension of time under the given circumstances.
originally behind schedule Cont.
Letter 3:
22 February 2013
We note that according to Clause 15, we are entitled to extension of time in case we
encounter exceptionally adverse weather.
Letter 4:
24 February 2013
The progress of the work was originally behind programme. Had work been carried out
in accordance with the programme, the weather would not have affected the
progress or completion of the works. Accordingly, your claim is rejected.

originally behind schedule - Held
 It is clear from the wording of the contract that if the delaying event, which
in this case was exceptionally adverse weather, affects the progress and as
a consequence the completion date, then a right to an extension of time
arises. There is no reference in the extension of time clause in the contract
to the programme and therefore the contractor's entitlement should not be
affected if he is behind programme.
 The wording of extension of time clauses in most standard contracts is
similar to such wording and if applied to the circumstances which prevailed
in this case would produce a similar result.
 Thus, if a contractor's progress is behind programme, it will not affect an
entitlement to an extension of time where completion is delayed due to
exceptionally adverse weather conditions. The governing factor is whether
the exceptionally adverse weather delayed the actual progress and in turn
the completion date.
 It is noted, however, that some arbitrators may disagree with the above
opinion.
Claim Based on Variations in a Delay
Period
The contract was for the construction of a number of buildings.
Contract Sum: £5,530,210. Contract period: 15 months. Contract
Completion Date: 27 April 2001
Work on site had been subject to a number of delays, all the
responsibility of the contractor. The engineer issued Variation
No 114 on 25 March 2002 instructing the contractor to re-hang
five steel doors to the opposite hand. The value of the work
was relatively low. It took the contractor 2 weeks to re-hang
the doors. The work under such variation was completed by 8
April 2002. Work was substantially completed on 9 May 2002.

Period Cont.
Clause 18:
“The Employer may at any time, unilaterally, make any change in
the Works within the general scope of this Contract; including
additions, omissions, alterations of the Works. If any change
causes an increase or decrease in the cost of, or the time
required for, the execution of the Works under this Contract, an
equitable adjustment shall be made. The Contractor shall
proceed immediately with the variation and shall not delay the
performance of the Works and/or the variation(s), awaiting
agreement on the valuation of the time/cost of the
variation(s)”.
Period Cont.
Letter 1:
25 March 2002
Variation NO 114
You are hereby requested to re-hang five steel doors to the opposite hand, as
indicated on the attached drawing.
Letter 2:
27 March 2002
We refer to Variation No 114 dated 25 March 2002. It is estimated that the
execution of the works under the variation will take 2 weeks. We formally
give you a notice of delay under the Contract.

Period Cont.
Letter 3:
29 March 2002
I refer to your letter dated 27 March 2002. I hereby inform you that an
extension of time of two weeks is hereby allowed in respect of the delay
caused by the work in re-hanging the doors.
The revised date for completion is therefore 11 May 2001.
Letter 4:
5 April 2002
Thank you for your letter of 29 March. We think, however, there must be some
mistake in the date given as the revised date for completion. Surely this
should be 2002 not 2001.
Period Cont.
Letter 5:
7 April 2002
With reference to your letter of 5 April 2002, there is no mistake in the date quoted, ie
11 May 2001. It is pointed out that apart from the matter of the variation, the delay
is wholly your responsibility and there is no entitlement to further extension of time.
Allowing two weeks beyond the original date for completion for the work in re-hanging
the doors, the revised date for completion thus becomes 11 May 2001.
Letter 6:
8 April 2002
We cannot accept your interpretation of the contract as contained in your letter of 7
May. The variation order in question was dated 25 March 2002 and it was agreed
that two weeks were required to do the work and that this was complete on 8 April.
Therefore there cannot possibly be any question of giving an extension of time till May
2001 for an event which occurred in April 2002.

Period Cont.
Letter 7:
10 April 2002
With reference to your letter of 8 April 2002, we do not agree with the content of your
letter. We draw your attention that Variation No 114, anyways, refers to a trivial
amount of work. You cannot be granted extension of time of almost a year for such
trivial work.
Letter 8:
15 April 2002
The work involved in Variation No 114 may be relatively trivial but we are entitled to an
extension of time beyond the date of the order sufficient to enable us to do the
work. It matters not that some or even all of the previous delay may have been
attributable to us. It was up to you to issue such variation. It is well understood that
due to the timing of the variation, an extension of time should be granted up to the
date the variation was issued plus adequate time to carry out the extra work.
Period Cont.
Letter 9:
17 April 2002
With reference to your letter of 15 April 2002, we note that work on your contract
should have been completed some months ago and you should have been off the
site before now.
We contend that the correct approach should be a net extension of time, that is to say,
one which calculated the revised completion date by taking the date currently fixed
for completion and adding to it the 2 weeks that are considered to be fair and
reasonable for the re-hanging works.
Letter 10:
19 April 2002
We draw your attention that if the net method was adopted, the extended completion
date would expire before the variation giving rise to the extension had been
instructed, which is logically and physically impossible. We consider this problem
resulted from the Employer's own voluntary conduct in requiring a variation during a
period of culpable delay.

Period Cont.
Letter 11:
21 April 2002
Your claim is rejected, on the basis stated in our letters 7 April 2002, 10 April 2002 and
17 April 2002.

Period – Held
Contractors frequently argue that due to the timing of a variation, an
extension of time should be granted up to the date the variation was issued
plus adequate time to carry out the extra work. However, this would be an
unacceptable excuse to eliminate the effect of all the contractor’s delays.
If we apply the Time Impact analysis or the Windows method, the result
would be that the contractor would be entitled to extension of time of 2
weeks.
Where an engineer issues a variation after the contract completion date but
before practical completion, it is appropriate where resultant delays occur
for an extension of time to be granted. Such extension of time will be
calculated by extending the completion date by the net period of delay.
This will not apply if the contract expressly states the opposite.
Would your answer differ if some of the delays were the

responsibility of the Employer and the Engineer issued an
extension of time for such delays, then a variation was
issued after the revised completion date?
The same result would apply if the variation was issued after the revised
completion date but prior to practical completion.
Claim Arising Out of Delays
The contract was for the construction of a small pumping station.
Contract Sum: £148,486. Commencement Date: 1 April 1999. Time for
Completion: 15 months.
There was a spell of very bad weather which affected the earthworks rather
badly. There was a suspension order by the Engineer. There was a
succession of variation orders, not great in value but taking a relatively long
time to carry out. Certain bending schedules which the contractor needed
were delayed by the employer. There was a delay due to exceptionally
adverse weather in August 2000 and the work was not finally completed
until December 2000.
Claim Arising Out of Delays Cont.

Clause 44:
“The Contractor shall be entitled to extension of time, if completion will be delayed as a
result of a variation, delayed drawings or instructions, errors in drawings, changes in
legislation, unforeseeable physical conditions, exceptionally adverse climatic
conditions, any cause of delay not attributable to the Contractor, any delay,
impediment or prevention attributable to the Employer, or the Employer's other
contractors on the Site…”.
Clause 46:
“If for any reason, which does not entitle the Contractor to an extension of time, the
rate of progress of the Works or any Section is at any time, in the opinion of the
Engineer, too slow to comply with the Time for Completion, the Engineer shall so
notify the Contractor who shall thereupon take such steps as are necessary, to
expedite progress so as to comply with the Time for Completion. The Contractor
shall not be entitled to any additional payment for taking such steps”.
Letter 1:
9 January 2000
As you know work on site was held up for three weeks for exceptionally inclement
weather in the last two weeks of November and first week of December. Then, the
work was suspended completely for the whole of December (four weeks) because of a
suspension order issued by the Engineer.
In accordance with Clause 44, we request an extension of time of 7 weeks and reserve
rights to claim for the additional cost.
A number of small but time-consuming variations were issued.

Letter 2:
10 April 2000
As we informed you at the last progress meeting, we urgently require the steel bending
schedules for the beams of the roof. Unless we get these by 26 April 2000 we shall be
delayed.

Letter 3:
12 April 2000
We understand that you required the bending schedules by 26 April. The delay in issuing
the bending schedules is regretted. There has been some difficulty in accommodating
the steel in certain columns and beams. It is expected that revised drawings and
schedules will be ready in mid-May.
In fact the drawings and schedules were not issued until end of May 2000. Work
continued and was delayed for further three weeks of exceptionally adverse weather
in August 2000.
In November, the Engineer wrote:
Letter 4:
3 November 2000
Your attention is drawn to the lack of progress on this job and in accordance with Clause
46 of the Conditions I must request you to take such steps as are necessary to
expedite progress.
Letter 5:
6 November 2000
We were astonished to receive your letter of 3 November invoking Clause 46. You are
aware of the delays which have occurred. Our request dated 9 January 2000 for
extension of time has not been granted. Since then there have been delays of six
weeks because of non-issue of the revised bending and three weeks for exceptionally
inclement weather in August, not to mention the many variations involving extra work
(total value of £12,450) for which we require an extra ten weeks.
We formally request an extension of time of 26 weeks.
Letter 6:
20 November 2000
I hereby extend the time for completion by 22 weeks in respect of delay notified to date.

Letter 7:
26 November 2000
We cannot accept your extension of time of only 22 weeks. Will you please let us know
how you arrive at this.
Letter 8:
1 December 2000
I have allowed 5 weeks for delay due to inclement weather and the suspension order, 4
weeks in respect of late issue of bending schedules, 3 weeks for inclement weather in
August 2000 and 10 weeks for extra work.
Letter 9:
2 December 2000
We consider your allowance for some of the delays are somewhat short. We submit
herewith our claim for compensation in respect of the extension of time to which we
consider ourselves entitled and we should be glad of an early payment on account. In
any case, we hereby submit a claim for additional costs for the extended 22 weeks.
CLAIM
22 weeks' delay consequent upon extension of time as per letter of 1 December 2000 at
£342 per week= £7,524.00

Letter 10:
23 December 2000
I must point out that overheads in the extra work have in any case been paid for in the
rates of the variations.
Analyze the contractor’s entitlement under each claim event, explaining the
contractor’s entitlement, as of the merit of his claim, in terms of extension
of time, cost and profit in respect of each. (No need to check the
calculations. This will be done in the following Case Study)
Claim Arising Out of Delays – Held
Initial inclement weather in November & December:
The first 3 weeks are in respect of inclement weather. Thus, the
Contractor is entitled to extension of time of three weeks for
inclement weather, but no cost.
Suspension:
The one week of inclement weather in December overlapped with
one week of the suspension. The net effect of the suspension is
therefore 3 weeks. Thus, the Contractor is entitled to extension
of time, cost and profit for three weeks for suspension.

Late issue of the bending schedules:
The Contractor is entitled to extension of time, cost and profit for 5
weeks (from 26 April till 31 May 2000) for the late issue of the bending
schedules.
Inclement weather in August :
Normally, the Contractor is entitled to extension of time of three weeks
for inclement weather, but no cost. However, the Contractor is pushed
in such period, due to the Employer’s earlier delays. It is accepted that
where events which do give such entitlement (such as delay in issue
of drawings and instructions) push the work into a period of inclement
weather which would otherwise have caused no extra cost, then the
extra cost attributable to such inclement weather period may also rank
for compensation. Thus, the Contractor would be entitled to extension
of time, cost and profit for the 3 weeks for inclement weather in
August 2000.
Extra work:
There is a misconception concerning additional overheads for extra work. It is
sometimes argued that extra work is being priced based on similar items in
the BOQ with rates, which themselves include overheads. However, this might
not suffice to cover actual overheads. On the basis that similarity of character
and of conditions is an essential term of the contract, if the extra work is of
small value relative to the time required to do it, the extra work should not be
considered similar. (For example, to take it to the extreme, if such work was
instructed to be executed during the original time for completion, the
Contractor might have executed them without extra overheads). Site
overheads are generally related to turnover, so that if turnover in relation to
variations is less than that for contract works generally, some adjustment is
called for. Thus, the Contractor is entitled to extension of time, cost and profit
for the 10 weeks for extra work, after adjustment in accordance with the
contract. (This will be explained further in the following Case Study)
Claim Arising Out of Delays &

Prolongation Costs
Same information and exchange of correspondence, as the previous
Case Study.
Make your judgment as to the quantification of the costs to which
the Contractor is entitled. (You will need to analyze the Contract’s
Sum, as to Direct Costs, Site Overheads, Head Office Overheads &
Profit), assuming:
Note:
The built up of the Contractor’s Contract Sum was as follows (this is accepted):
Contract Sum = Direct Costs + Site Overheads + Headoffice Overheads + Profit
Site Overheads = 15% * Direct Costs
Headoffice Overheads = 8.5% * (Direct Costs + Site Overheads)
Profit = 5% * (Direct Costs + Site Overheads + Headoffice Overheads)
Value of Extra Work = £ 12,450
Prolongation Costs – Held
o Initial inclement weather in November & December:
The Contractor is entitled to extension of time of 3 weeks for
inclement weather, but no cost.
o Suspension:
The Contractor is entitled to extension of time, cost and profit
for 3 weeks for suspension.
o Late issue of the bending schedules:
for 5 weeks for the late issue of the bending schedules.
o Inclement weather in August :
for the 3 weeks for inclement weather in August 2000.
o Extra Work (treated separately)

o For the following:
o Suspension (3 weeks)
o Late issue of the bending schedules (5 weeks)
o Inclement weather in August (3 weeks)
Prolongation Costs should be calculated for a period of 11

weeks.
Analyzing the Contractor’s Tender:
Contract Sum = Direct Costs + Site Overheads + Headoffice Overheads + Profit
= 148,486.00
Site Overheads = 15% * Direct Costs
Headoffice Overheads = 8.5% * (Direct Costs + Site Overheads)
Profit = 5% * (Direct Costs + Site Overheads + Headoffice Overheads)

• Contract Sum = Direct Costs + Site Overheads + Headoffice Overheads + Profit
• Use SO, HO & P to symbolize Site Overheads %, Headoffice % & Profit %
• Contract Sum = Direct Costs + (SO * Direct Costs) + HO * (Direct Costs + Site
Overheads) + P * (Direct Costs + Site Overheads + Headoffice Overheads)
• Contract Sum = Direct Costs + (0.15 * Direct Costs) + 0.085 * (Direct Costs +
Site Overheads) + 0.05 * (Direct Costs + Site Overheads + Headoffice
Overheads)
• Since, Headoffice Overheads = 0.085 * (Direct Costs + Site Overheads) = 0.085 *
(Direct Costs + 0.15 * Direct Costs ) = 0.085 * (1 + 0.15) Direct Costs
• Thus, Contract Sum = Direct Costs + (0.15 * Direct Costs) + (0.085 * (1 + 0.15)
Direct Costs) + 0.05 * (Direct Costs + 0.15 * Direct Costs + (0.085 * (1 + 0.15)
Direct Costs))
• Thus, Direct Costs = Contract Sum /(1 + 0.15 + (0.085 * (0.15 + 1)) + 0.05 * (1
+ 0.15 + (0.085 * (0.15 + 1))))
• Thus, Direct Costs = Contract Sum /(1 + SO + (HO * (SO + 1)) + P * (1 + SO +
(HO * (SO + 1))))
• Direct Costs = 113,336.20
• Site Overheads = SO * (Direct Costs) = 17,000.43
• Head Office Overheads = HO * (Site Overheads + Direct Costs) = 11,078.61
• Profit = P * (Direct Costs + Site Overheads + Headoffice Overheads) = 7,070.76

• Time for Completion = 15 months = 65 weeks
• Site overheads/week = Site Overheads / 65 weeks = 17,000.43 / 65 = 261.55
Prolongation Costs:
• Delay Period = 11 weeks
• Site Overheads during delay period = 261.55 * 11 = 2,877.00
• Head Office Overheads = 2,877.00 * 8.5% = 244.54
• Sub-total = 3,121.54
• Add Profit = 3,121.54 * 5% = 156.08
• Total Prolongation Costs = 3,277.62
Extra work:
There is a misconception concerning additional overheads for extra work. It is
sometimes argued that extra work is being priced based on similar items in
the BOQ with rates, which themselves include overheads. However, this might
not suffice to cover actual overheads. On the basis that similarity of character
and of conditions is an essential term of the contract, if the extra work is of
small value relative to the time required to do it, the extra work should not be
considered similar. (For example, to take it to the extreme, if such work was
instructed to be executed during the original time for completion, the
Contractor might have executed them without extra overheads). Site
overheads are generally related to turnover, so that if turnover in relation to
variations is less than that for contract works generally, some adjustment is
called for. Thus, the Contractor is entitled to extension of time, cost and profit
for the 10 weeks for extra work, after adjustment in accordance with the
contract.

Extra work:
• The Contractor claimed the price of the variation (including overheads and profit),
then claimed the prolongation costs for the extended period for executing the VO.
• Original Contract Turnover /week = Contract Sum / 65 weeks = 148,486 / 65 = 2,284.40
• Site overheads/week = Site Overheads / 65 weeks = 17,000.43 / 65 = 261.55
• Value of Extra Work = 12,450
• Should have been executed in =
Value of Extra work / Turnover per week = 12,450 / 2,284.4 = 5.45 weeks
• Actually executed in = 10 weeks
• Lost overheads for a duration of: 10 – 5.45 = 4.55 weeks
Site Overheads per week * 4.55
• Lost Site Overheads for such duration =
= 261.55 * 4.55 = 1,190.03
• Lost Head Office Overheads = HO * Lost Site Overheads = 8.5 % * 1,190.03 = 101.15
• Sub-total = 1,291.18
• Add Profit = P * Sub-total = 5 % * 1,291.18 = 64.56
• Total Claim = 1,355.74
Claim Based on Period for Calculating
Prolongation Costs
The contract was for the construction of a school.
Commencement Date: 1 January 2010. Time for completion: 8 months.
The Contractor submitted with his tender a breakdown of his site overheads. The site
overheads are varying over the project duration.
Work on site had been subject to delay, as certain drawings were required to be issued
in the first week of month 4 (April), but they were delayed to the first week of
month 6 (June).
Letter 1:
25 March 2010
We regret to inform you that there will be a delay in the issue of the drawings. It is
expected that the drawings will be ready soon.
In fact the drawings were not issued until 1 June 2010.

Prolongation Costs Cont.
Letter 2:
15 June 2010
We refer to your letter dated 25 March 2010 and to the delay in the drawings and
hereby serve a notice for extension of time and prolongation costs as a result of the
suspension of works due to the delay in drawings. Since the drawings were
expected on 1 April 2010 and were issued on 1 June 2010, we request an extension
of time of two months, thus shifting the completion date to 1 November 2010. The
site overheads will be calculated for the duration from 1 April 2010 to 1 June 2010.
Letter 3:
20 June 2010
We agree to your request for extension of time and grant an extension of time till 1
November 2010. However, you should calculate the site overheads for the extended
period, i.e. the site overheads should be related to the period between the contract
completion date and the extended completion date.
Prolongation Costs Cont.
Letter 4:
30 June 2010
We do not agree with your view regarding prolongation costs. The value of the
prolongation costs related to the overrun period at the end of the contract is much
less than the value of the prolongation costs at the period when the delay occurred.
We request the value of the prolongation costs at the period when the delay
occurred, which we contend is the correct value resulting from the delay.
As a judge, draft your opinion; once it is established that additional payment

is due for prolongation resulting from employer delays, should the
evaluation relate to the period when the effect of the delay occurs or by
reference to the overrun period at the end of the contract, or should it be
the average of the prolongation costs over the whole duration. Explain
your answer.

Site Overheads (EGP)
900,000
800,000
700,000
600,000
500,000
400,000 Site Overheads…
300,000
200,000
100,000
0
1 2 3 4 5 6 7 8
 The intention is for the contractor to be reimbursed the additional cost
which resulted from the employer delays. This involves a comparison
between the actual costs incurred and what the cost would have been
had no delay occurred.
 Thus, the evaluation should relate to the period when the effect of the
delay occurs and not by reference to the overrun period at the end of the
contract. That is because the period when the delay actually took place is
the period when the costs were incurred.
 Thus the correct period is months 4 and 5 (from 1 April 2010 to 1 June
2010).
Claim for Extension of Time without

Proper Notice
The contract was for the construction of a Headoffice.
Tender dated 1 May 2007. Time for completion: 21 months.
Acceptance dated 7 June 2007.

Clause 21:
“If the Contractor intends to claim extension of time or additional payment in
accordance with any Clause of the Contract, he shall give notice of his intention to
the Engineer, with a copy to the Employer, within 15 days after the event giving rise
to the claim has first arisen. Within 15 days after the Contractor has sent the notice,
the Contractor shall send to the Engineer a fully detailed claim which includes full
supporting particulars of the basis of the claim and of the extension of time and/or
additional payment claimed”.
Proper Notice Cont.
Work on site had been subject to delay, as the Engineer issued a suspension order
to make design changes. Later on, no design changes were made and the
Contractor was instructed to proceed with the original drawings.
Letter 1:
1 October 2007
You are hereby instructed to suspend works on the Site, as the Employer is intending
to make design changes. Accordingly, the drawings already issued to you must not
be worked to. Revised drawings will be issued in about one month.
Letter 2:
20 October 2007
We are glad to inform you that no design changes will be made. Accordingly, you are
instructed to proceed with the original drawings.

Proper Notice Cont.
Letter 3:
10 November 2007
We refer to your letters dated 1 October 2007 and 20 October 2007 and hereby serve
a notice for extension of time and additional costs as a result of the suspension of
works. We are currently working on quantifying the delay and the additional costs
and will send you the details soon.
Letter 4:
20 November 2007
With reference to our letter of 10 November 2007, please find attached the detailed
particulars for our claim for extension of time and additional payment.
Proper Notice Cont.
Letter 5:
30 November 2007
With reference to your letter of 10 November 2007 and to Clause 21 where you are
required to serve a notice for extension of time and additional payment within 15
days after the event giving rise to the claim has first arisen. You have failed to
provide proper notice in accordance with the Contract. Accordingly, we regret to
inform you that your claim is rejected.
Letter 6:
2 December 2007
We are surprised with your letter of 30 November 2007. You are well aware that the
Employer has suspended the works for 19 days. Thus, the works are delayed for
reasons attributable to the Employer and for which the Contractor holds no
responsibility. We are surprised you are intending to reject our plain obvious claim,
for a mere procedural matter.

Proper Notice Cont.
Letter 7:
10 December 2007
Unfortunately, you have misinterpreted the clause. You need to abide by the contract
provisions in order not to lose your rights under the Contract. We regret you were
unable to abide by the contract provisions. You have missed the duration in the
Clause for submitting the notice, thus you have lost your right to extension of time
and/or additional payment.
Letter 8:
20 December 2007
We contend that the durations for the notice and particulars are mere procedural
matters. Failure to abide by such durations should not result in loss of our rights.
Abiding by such durations is not a condition precedent to our rights under Clause 21.
Proper Notice Cont.
Letter 9:
25 December 2007
We re-iterate that we regret that you have misinterpreted the Clause. Why include
durations in a Clause, when it is not expected from the Contractor to abide by them?
You have agreed to the Clause and to the durations by signing the Contract.
Letter 10:
27 December 2007
But if we follow your logic, then you will deduct liquidated damages from us, although
the Employer delayed the works?

Proper Notice Cont.
Letter 11:
30 December 2007
I will have to explain to you that in order to avoid deducting liquidated damages in
such case, you need to have submitted a proper claim for extension of time. Failing
to submit a proper claim, results in no extension of time, accordingly, the Employer
is entitled to deduct liquidated damages. If the contractor elects not to comply with
the notice requirement, it can properly be regarded as a breach of contract.

Proper Notice - Held
 Where a contractor fails to serve a proper delay notice this will
not result in the loss of rights to an extension of time unless the
contract expressly states that the service of a notice is a condition
precedent to such rights or that the entitlement for the claim shall
be lost, in case of failure to comply with the notice requirements.
 In the case at hand, the notice is not a condition precedent.
Thus, the contractor does not lose his entitlement to the claim.
Claim for Liquidated Damages where

the Employer suffers no loss
The contract was for the construction of a university campus.
Commencement Date 1 June 2010. Time for completion: 12 months.
Contract Price: $1,000,000

Clause 15:
“The Parties agree that the Contractor shall pay to the Employer as liquidated
damages 2.5% of the Contract Price for each week or part of a week of delay in
completing the Works, beyond the Completion Date. The limit of liquidated damages
is 10% of the Contract Price”.
The progress of the work was behind schedule, for reasons for which the Contractor
was responsible. Instead of being completed in June 2011, work was completed in
August 2011.
the Employer suffers no loss Cont.
Letter 1:
1 August 2011
You have been informed in several occasions that the progress of the work was behind
schedule, for reasons for which you are responsible. You are hereby informed that
liquidated damages will be deducted with a value equivalent to 10% of the Contract
Price, i.e. $100,000.
Letter 2:
10 August 2011
We note that the university is not working in the summer. Accordingly, you have
suffered no loss as a result of our delay. We thus contend that the liquidated
damages expressed in the contract should not become payable.

the Employer suffers no loss Cont.
Letter 3:
21 August 2011
Liquidated damages are a reasonable pre-estimate of the loss the employer anticipates
he will suffer if the contractor completes late. Its advantage is that the contractors
know in advance the extent of risks they are taking and employers do not have the
expense and difficulty of proving their loss item by item. Liquidated damages clause
automatically comes into play when the contractor completes late without a
contractual justification and the employer is not required to demonstrate that he had
suffered loss.

the Employer suffers no loss – Held
 This is a point where Common Law differs from Civil Law.
 Under Common Law: When there is an agreed upon liquidated
damages for delay, the employer does not need to prove losses
due to delays. An employer may deduct liquidated damages even
though in the event he has suffered no loss.
 Under the Egyptian Civil Code: the Judge may reduce the
damages if the contractor proves that the estimation was
exaggerated to a big extent or that the obligation was executed in
part
Thank You

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As a judge, decide whether the Employer is entitled to deduct liquidated

Claim Based on Taking Possession of a

The Contractor awarded the electromechanical works to a Subcontractor. The

The Subcontract included the following provision: Clause 8:

Claim Based on Liquidated Damages

Claim Based on Liquidated Damages

Claim for Delay in Completing Sections

The Conditions of Contract included the following provision:

Claim for Delay in Completing Sections

Claim for Delay in Completing Sections

The Conditions of Contract included the following provision:

Claim where a contractor’s progress is

As a judge, draft your opinion. Explain your answer.

Claim where a contractor’s progress is

Claim Based on Variations in a Delay

Claim Based on Variations in a Delay

Claim Based on Variations in a Delay

Claim Based on Variations in a Delay

As a judge, draft your opinion. Explain your answer.

Would your answer differ if some of the delays were the

Claim Arising Out of Delays Cont.

A number of small but time-consuming variations were issued.

Claim Arising Out of Delays Cont.

Claim Arising Out of Delays Cont.

Claim Arising Out of Delays Cont.

Claim Arising Out of Delays – Held

Claim Arising Out of Delays &

Claim Arising Out of Delays &

Prolongation Costs should be calculated for a period of 11

Claim Arising Out of Delays &

Claim Arising Out of Delays &

Claim Arising Out of Delays – Held

Claim Based on Period for Calculating

As a judge, draft your opinion; once it is established that additional payment

Claim Based on Period for Calculating

Claim for Extension of Time without

The Conditions of Contract included the following provision:

Claim for Extension of Time without

Claim for Extension of Time without

Claim for Extension of Time without