Mulatu, Dessie (2007) Extension of Time and Liquidated Damage Under Different Standard Construction Contract Forms. Masters thesis, Addis Ababa University.
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Abstract
In principle construction work set out a date in which the particular contractor is obliged to complete the work. The contractor should complete the work on the specified date stated in the contract. However, the practice shows that there are difficulties on the part of the contractor on the specified date to complete the work on the specified date. This might be attributable either to lack of calculation the in estimation of completion date or other factors that threatens the smooth running of the project. It might be the employer fault, the contractor fault or neutral events. Given the fact that there is potential for delay to occur in construction industry it is perhaps surprising that any construction work is even completed on the specified contract time. It is already stated that the contractor might encounter several delaying circumstances during of the course of the work. This might justify the inclusion of the mechanism that deals with delays which likely to affect the completion date. This is the concept of "extension of time" clause. It allows the party to revise the contract period under the specified grounds. 'Extension of time' clause has importance for the contractor and the employer. Extension of time might reduce the contractor's risk in relation to delay by entitling him a time for completion. Other wise he will be subjected to liquidated damage. On the part of the employer it preserves the employer's right to liquidated damage due to act of prevention (faults of employers). It is not untrue that it is only for events stated in the contract as a relevant event justified as a ground for extension of time. It might be neutral events like force majuere of events due to the employer. Most standard contract forms framed broadly so as to include both events. If the contract period lapsed due to employer's fault and this is not included as a ground then there is a possibility that time will be at large. In this case there is no specific completion date. The contractor is expected to complete in a reasonable time. The issue as to the link between extension of time and the recovery of loss and expenses or extra cost for extended period is controversial. Most standard form stated that the linkage between the two lies on the fact that whether the delay is due to neutral event or the fault of the employer. If the delay is due to neutral event, the contractor will not recover the loss and cost for extended time. The contractor bears his own cost (the loss lies where its falls) . Whereas if the delay is due to the employer fault, the employer is liable to pay for the loss & the costs. It is also important to note that the inclusion of extension of time clause does not automatically justify extension of time unless the contractor complies with the procedural and substantive element in the contract. The contractor is obliged to give notice for any delay with its details. Moreover the contractor is entitled to extension of time only if there is delay due to relevant events that affect critical path (completion date). Finally most standard forms widely practiced in Ethiopia recognize liquidated damage as a remedy if the contractor fails to complete a work on time. The inclusion of liquidated damage clause and the existence of certain completion date is a prerequisite. Moreover, the amount of liquidated damage should be a genume pre-estimate and should be recovered without court proceedings.
| Item Type: | Thesis (Masters) |
|---|---|
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Divisions: | Africana |
| Depositing User: | Kabiru Wallace Ndung'u |
| Date Deposited: | 24 Jun 2019 10:20 |
| Last Modified: | 24 Jun 2019 10:20 |
| URI: | http://thesisbank.jhia.ac.ke/id/eprint/9268 |
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