Issue Notices: Don’t Put Your Business At Risk #3
Make Sure You Get Noticed! (Part 3)
This week’s Wise Up Wednesday is the last of three WUW’s about the all important subject of notices. And yet again this week I have a Subcontractor Client who can’t claim extension of time and loss and expense because he has not complied with the condition precedent clause in the contract!
So, I will start Part 3 with a warning about conditions precedent.
Condition Precedent
The first thing to say is: check the contract and DO NOT accept them!
The second thing to say is: If you have accepted them, then you MUST comply with them.
Julian Bailey, Construction Law, 2nd edition 2016, Section 3.50 has this to say:
A condition precedent is a contractual stipulation that must be satisfied before a right or an obligation comes into existence.
So, if you don’t do what you’re supposed to do, when you’re supposed to do it, then you will lose your entitlements!
And if you think there’s any room for argument, think again, because the House of Lords (Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem nv [1978] 2 Lloyd’s Rep. 113) held that conditions precedent will be binding if:
• the clause states the precise time within which the notice is to be served; and
• it makes plain by express language that, unless the notice is served within that time, the party making the claim will lose its rights under the clause.
So, please do not ignore conditions precedent!
Essential points of a ‘good’ letter or notice
It is not necessary to be a ‘barrack room lawyer’ or a ‘smart Alec’ in order to write a good letter. Some key points are:
• Put the subject heading at the top of every letter.
• Make the letter ‘self-contained’ so a stranger can understand it in a year’s time.
• Confine the contents to the simple facts without emotion.
• Don’t delay – write the letter while the problem is happening.
• Make sure you comply with the requirements of the contract (if it says a notice is only valid if sent by Special Delivery, then that is what you must do)
• Make sure you send it to the right person/place (some Contractors include very specific requirements).
Things to Ensure
1. Put the notice in writing as soon as the problem becomes apparent.
2. Use an objective non-confrontational tone, but don’t use ‘victim language’ (“we have been prevented… rather than “we are in delay…”).
3. State the specific problem causing the delay or disruption, the area affected, and the and actions required from others.
4. Give a view as to the effects on programme and overall completion.
5. Request extension of time if necessary.
6. Give details of any obvious cost effects.
7. Update as necessary from time to time and record date when delay is cleared.
8. Show willingness to co-operate but not at our own expense
Be Proactive!
Serve your notices, but don’t get bogged down in a ‘letter war’ for its own sake. Show a willingness to talk to the Client and/or Contractor and explain your problem to them, discuss and propose possible solutions.
One often overlooked purpose of giving notice is to ensure the Contractor knows exactly what is going on, and to give him the opportunity to do something about the matters which are delaying you.
Obligations To Accelerate
In the absence of an express provision within the contract, there is no general obligation on the Contractor or you the subcontractor to accelerate the progress of the works where they have fallen behind programme because of matters beyond your control.
If the Contractor wishes you to accelerate then he must secure your agreement. If he purports to issue a direction to accelerate, you can refuse to comply unless he can demonstrate that he is empowered to instruct you to do so under the contract.
So, watch out for non-standard clauses requiring free acceleration!
Back up the notice with evidence
Don’t rely on anyone else to have details of the delay issue. They might be the party who ends up making the final decision if the issue gets referred to Adjudication or Arbitration, and/or be keen to see your claim fail.
Wherever possible supply back up information to support the delay notice, if you can cross reference all other information, including, if possible, a programme showing the effect on the works. If you can’t send back up information at the time, then follow it up as soon as you can with further information.
Whatever You Do You Must Take Action
Take action to safeguard your business from the catastrophic impact of delay and disruption.
If you don’t then it could cost you your business…
Some unscrupulous Contractors use every trick in the book, to reduce and delay payments, including blaming you for delay and setting off all the costs against your account.
Condition precedent: Don’t be one of the casualties, take action now.
You can call us for initial no cost advice on 01773 712116, and our Gold and Platinum Buddies can use their commercial and contractual consultancy to establish the best course of action.
Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and please don’t hesitate to pick up the phone and give us a call if you need any help with any of your business problems on 01773 712116.
And please remember that most business owners just hope the problem will go away. Be one of the smart ones that actually makes sure that delays won’t lead to payment problems that could cost you your business…
Problems with Condition Precedent?
Take action and call us now on 01773 712116 or email StreetwiseSubbie here.
If you missed the frist two parts of this series of post about notices, then you can read them here; Issue Notices Part 1 and Issue Notices Part 2
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