Civil Engineering Reference
In-Depth Information
As damages is a monetary remedy, the party suffering the loss can only be put in the
position it would have been in, but for the breach, insofar as a payment of money to
them allows.
Building contracts will often confer on the contractor a right to an increase
in the contract sum for direct loss and/or expense incurred by the contractor on
the occurrence of certain events, e.g. failure or delay in issuing instructions or
information, which otherwise would be treated as damages for breach of contract.
Although the nature of the claim in such cases is conceptually different insofar as
it is a claim for payment under the contract rather than a claim for damages, the
calculation of the direct loss and/or expense is likely to be little different from a claim
for damages for breach of contract. See clauses 4.23-4.26 of the SBC, 4.2-4.23 of
the SBC/DB and clauses 60-65 of the NEC3 relating to compensation events, as
discussed in Section 8.3.
If the contract is rescinded by the contractor due to a material breach by the
employer, the contractor is likely to be entitled to recover by way of damages the
proithewouldhavemadehadthecontractbeencompletedintheordinarycourse.
If the works had been partially carried out, the contractor retains the right to
payment for the value of such works. The rescission of a contract in consequence of
a repudiation does not affect accrued rights to payment under the contract, unless
the contract provides that it was to do so, see
Hyundai Heavy Industries Co. Ltd
v.
Papadopoulos and others
(1980).
Intheeventofabreachofcontractbythecontractor,againthecontractmayprovide
the remedy in certain circumstances, see, for example, the liquidated and ascertained
damages provisions in respect of non-completion under clause 2.32 of the SBC and
clause 2.29 of the SBC/DB. If the contractor does not complete the contract works,
the employer's loss will be the additional cost of completing the works, if any. If the
works are completed at no additional cost, there will be no loss. It should, however,
be noted that there is authority in Scotland to the effect that where a breach of con-
tract is established the pursuer is entitled to nominal damages, even if no loss can be
demonstrated. his comes from the opinion of the Lord President in
Webster & Co
.v.
he Cramond Iron Co
. (1875) in which he stated that:
[Where the] contract and the breach of it are established
that leads of necessity
to an award of damages. It is impossible to say that a contract can be broken even in
respect of time without the party being entitled to claim damages - at the lowest,
nominal damages.
…
Secondary Option X7 of NEC3 provides for delay damages at the rate specified in the
Contract Data from the Completion Date through to the earlier of Completion or the
date when the Employer takes over the works. While Secondary Option X18 of NEC3
places a number of limits on liability, it excludes various matters, including, notably,
delay damages.
Another common breach of contract by the contractor is the existence of defects in
the works executed or that the works executed do not conform to the requirements
of the parties' contract. Assuming the contract contains no specific mechanism under
which the contractor is obliged to remedy defects, such as clauses 2.38 and 2.39 of
