Variations - Building Contract Claims - page 339

extension of time or loss and/or expense and even rarer that this lack of
belief will be countered by the opposite belief on the part of the employer.
A similar clause (referred to as 'clause 13.8') was considered in the
Scottish case City Inn Ltd v. Shepherd Construction Ltd 610 . There, as in this
instance, there were consequences if the contractor failed to operate the
provisions of the clause. There it was loss of entitlement to extension of
time under clause 13.8.5; here it is loss of entitlement to early payment and
to interest or finance charges. The contractor contended that the clause
imposed no obligation on him to address his mind to whether the instruc-
tion would have the contemplated effects and, therefore, the contractor
could not be said to have failed to comply unless he had formed an opinion
that the instruction would have those effects, but had not acted accordingly.
Lord MacFadyen dismissed this approach:
'I am therefore of the opinion that on a sound construction of clause 13.8.1
the contractor, on receipt of an architect's instruction, was obliged to
consider whether it would require adjustment of the contract sum and/
or an extension of time, so as to place himself in a position (if he formed
the opinion that it would have that effect) to comply with his obligations
to defer executing the instruction and to provide the requisite details to
the architect. The wording of the clause is, it seems to me, less than
perfect. It does not expressly address the eventuality of the contractor
reasonably and in good faith forming the opinion that the contemplated
consequences will not follow from the instruction, and consequently not
doing what clause 13.8.21 required, and the need for an extension of time
later becoming evident. It is unnecessary, however, for the purposes of
this case to decide whether in that event the contractor would have lost
his entitlement to an extension of time.' 611
The question left unanswered by the court in this instance is important.
Would the contractor lose entitlement to early payment and to interest or
financing charges if he had formed the opinion that the instruction had no
consequences, but subsequently that opinion was found to be a wrong
conclusion? In such circumstances, it is thought that, upon the contractor
making that contention, the burden of proof would switch to the employer
to show that no reasonably competent contractor could have formed such an
initial conclusion.
The way the provision works is that after every instruction, the contractor
considers whether he can produce the necessary estimates within 14 days
and, if not, he suggests a longer period. If the employer disagrees, the
contractor prepares estimates as quickly as possible and, if the employer
feels strongly or, more likely, if the extra time in producing estimates has
caused some delay, the employer may, of course, refer the matter to one of
the dispute resolution procedures.
610 17 July 2001, unreported. The case went to appeal to the Scottish Court of Session [2003] BLR 468
but the original decision was upheld.
611 City Inn Ltd v. Shepherd Construction Ltd , 17 July 2001, unreported, at paragraph 23.