Civil Engineering Reference
In-Depth Information
a claim based upon an alleged breach of contract is irrelevant. The correct way to
proceed is to claim for payment based upon the contractual provisions, see
Muir
Construction Ltd
.
In this section we will examine the termination provisions under the SBC, the
SBC/DB and the NEC3.
9.4.2 General termination provisions under the SBC and the SBC/DB
hegeneralterminationprovisionsoftheSBCandtheSBC/DBaretobefound
in clause 8. Clause 8.1 sets out the meaning of insolvency and is considered in
Section 9.8.2.
Clause 8.2 provides that a notice served under clause 8 is not to be given unreason-
ably or vexatiously. For a consideration of the phrase 'unreasonably or vexatiously',
see
J M Hill & Sons Ltd
v.
London Borough of Camden
(1980);
John Jarvis Ltd
v.
Rock-
dale Housing Association Ltd
(1986); and
Ferrara Quay Ltd
v.
Carillion Construction
Ltd
(2009). In
Ferrara Quay Ltd
, the Employer was a special purpose vehicle, the
Contractor threatened to terminate to safeguard its financial position, due to the
Employer's failure to make timeous payments and the refusal by the guarantor to step
into the Employer's shoes to secure funding for the rest of the project. The Employer
obtained an interim injunction to prevent the Contractor terminating and then
applied for a continuation of the hearing in respect of the injunction on the basis that
it would be unreasonable and vexatious of the Contractor to give notice to terminate,
particularly given that the project was only a few months from completion. The
court discharged the interim injunction and held that, despite the presence of a
guarantor (in respect of which the guarantee was limited), the Employer remained
'an uncreditworthy special purpose vehicle' and in the prevailing economic climate,
theContractorwouldnotbeactingunreasonablyorvexatiouslyingivingnoticeto
terminate. Whether the giving of a notice of termination is unreasonable or vexatious
willbeaquestionoffactineachcase.
Termination takes effect upon receipt of the relevant notice, see clause 8.2.2. Each
notice referred to in clause 8 requires to be given in writing. Unlike many other
notices under the SBC and the SBC/DB (see clause 1.7), notices relevant to termina-
tion require to be given by actual, special or recorded delivery, see clause 8.2.3. There
is a deeming provision in relation to receipt of notices given by special or recorded
delivery post (see clause 1.7.4). Failure to comply with the provisions of the contract
as to the giving of notice can be fatal, see, for example,
Muir Construction Ltd
v.
Hambly Ltd
(1990). Compare, however, the decision of the House of Lords in
Mannai
Investment Co. Ltd
v.
Eagle Star Life Assurance Co. Ltd
(1997).
The relevant provisions of clause 8 are, in terms of clause 8.3.1, stated to be with-
out prejudice to any other rights and remedies available to the Employer and to the
Contractor. The other remedies open to the Employer and to the Contractor are con-
sidered in Chapter 10.
It should be borne in mind that irrespective of the grounds of termination, the
Contractor'semploymentmaybereinstatedatanytimeandonsuchtermsasthe
parties agree, see clause 8.3.2.
