Civil Engineering Reference
In-Depth Information
Accordingly, where the common law right of retention is open to a party, such as a
contractor,theyareentitledtosuspendperformancewhenconfrontedbyanemployer
who refuses to pay. It should be noted that it is possible to contract out of the com-
mon law right of retention, see
Redpath Dorman Long Ltd
v.
Cummins Engine Co. Ltd
(1981). That can only be achieved by the use of clear and unequivocal words in the
parties' contract.
While each case will depend on its own individual facts and circumstances, caution
should be exercised before deciding to withhold performance, as it is possible that a
wrongfulsuspensionbyaContractormayamounttoarepudiatorybreach,acceptance
of which would entitle the Employer to rescind the contract, as discussed above at
Section 10.2, see
Mayhaven Healthcare Limited
v.
David Bothma and Teresa Bothma
T/A DAB Builders
(2009).
10.9.2 Suspension of performance under the 1996 Act
Section 112 of the 1996 Act as amended provides a right to suspend performance for
non-payment where a sum due under a construction contract is not paid in full by the
final date for payment and no effective notice of intention to pay less has been given.
In those circumstances, the person to whom the sum is due is entitled to suspend
performance of any or all of their obligations under the contract to the party by whom
payment ought to have been made. his right is without prejudice to any other right or
remedy open to the party entitled to payment. his would allow them to raise separate
proceedings for payment, should they so wish. he right to suspend performance does
not deprive the entitled party of any other rights competent to them. The right to
suspend performance under the 1996 Act only arises in the event of non-payment.
herightmaynotbeexercisedwithoutirstgivingtothepartyindefaultatleast
seven days' notice of intention to suspend performance. The notice must state the
ground or grounds upon which it is intended to suspend performance. The contract
can stipulate that a period in excess of seven days' notice of intention to suspend per-
formance must be given. In practice, employers under a main contract (and main
contractors in a sub-contract) will insist upon a greater period of notice. The right to
suspend performance ceases when the party in default makes payment in full of the
amount due. Subsection 112(3A) provides that the party in default is liable to pay to
the party exercising the right to suspend performance under the 1996 Act a reason-
able amount in respect of the costs and expenses reasonably incurred by that party as
a result of the exercise of the right. Any period of suspension of performance is dis-
regarded in computing the time taken by the party to complete the works. Not only
does this apply to the party exercising the right to suspend, but also to any affected
third party.
10.9.3 Suspension under the SBC, the SBC/DB and the NEC3
The Contractor's statutory right of suspension is provided for by clause 4.14 of the
SBC. A written notice of intention to suspend must be given to the Employer, with a
