When considering UK construction standard form contracts, it has been clear to most users that the NEC suite contains a condition precedent or time-bar clause, whilst the JCT suite does not.
Conditions precedent under the JCT suite
Strictly speaking, that view has not been true since Walter Lilly v Mackay (2012).
Although not argued in the Technology and Construction Court (England), the parties had agreed that the contractor had to apply with supporting information on time to be entitled to ‘loss and/or expense’ (JCT jargon for additional costs incurred due to specific listed risk events). This case focused on clause 26 of the JCT Standard Building Contract 1998 Private Without Quantities, a form for traditional procurement.
More recently, the Scots Outer House decided that the JCT suite does include a condition precedent. The critical wording was this phrase:
[the contractor] shall, subject to… compliance with the provisions of clause 4.21 be entitled to reimbursement of that loss and/or expense
The court reviewed the contract to ‘ascertain the intention of the parties’ ie what a reasonable person with their background knowledge would have understood the language to mean. The court said the wording was clear and straight-forward.
The language (set out in clauses 4.20 and 4.21 of the Standard Building Contract with Quantities for use in Scotland 2016) indicates that the contractor’s entitlement to reimbursement of its loss and/or expense is ‘subject to compliance with clause 4.21‘.
The court held
it is difficult to construe this language [as anything] other than… a condition precedent
What do you need?
The classic requirements for a condition precedent are:
- a process to be followed
- a time limit within which that process has to be carried out
- a sanction for non-compliance.
The contractor argued that whilst there was a process there was no sanction for non-compliance. On the contrary, said the court, the contractor’s entitlement is clearly stated to be dependent on compliance [56].
The contractor also argued that the provisions are unclear. Not so! The court held that clause 4.21 sets out a practical and workable set of steps for the contractor to notify and provide supporting information [58].
The court did not consider that the lack of a specific period for the contractor’s notice was a barrier to its interpretation of the clause as a condition precedent [63].
What should you do?
For those creating contracts: use conditions precedents, strict procedural requirements and time-bars to encourage ‘timely and well administered’ contract management. But make sure they are clear and workable, rather than ammunition for a fight.
For users, make sure you understand the procedures in your contracts before you agree to implement them, rather than complaining when they work against you!
Sources: Walter Lilly & Company Ltd v Mackay & Anor [2012] EWHC 1773; FES Ltd v HFD Construction Group Ltd [2024] ScotsCS CSOH_20
Related posts: what is a condition precedent, spotting conditions precedent and beware time bars.
