If you're building or renovating, or working in the building and construction industry, it's important that you know about extension of time clauses. An extension of time clause allows a party to a building contract to extend the time for completion of the building works beyond the original date of completion.
Extension of time clauses allow parties to continue project execution without financial penalties. In general, an extension of time is granted when the cause of the delay is beyond the parties' control and interferes with the path to practical completion.
The validity of a claim for an extension of time under a construction contract depends on whether or not the construction contract contemplates the reason given for the extension. It is equally important to know the circumstances in which you are not entitled to claim an extension of time.
What are circumstances in which an extension of time be granted?
Construction contracts typically incorporate provisions defining the circumstances under which an extension of time may be granted. These provisions are as follows:
- adverse weather conditions
- adverse site conditions
- delayed delivery of essential materials
- variations that increase the scope of the work
- latent conditions
- force majeure events, such as acts of war or terrorism
- changes in legislative requirements
Requesting an extension of time doesn't grant an unrestricted privilege to the contractor to postpone the project without facing consequences.
What happens when there are multiple delays?
Multiple delays occurring at the same time are generally referred to in the contract as a concurrent delay. If one of the delays is a consequence of substandard performance, that party will be unable to claim an extension of time - regardless of whether the concurrent delay is impacting the date for practical completion. In circumstances where the concurrent delay isn't a consequence of substandard performance, the causes of delay may be apportioned between the parties. An extension of time equal to the apportionment will be granted.
Parties must adhere to the provisions of the contract when seeking an extension of time for that claim to be valid. This assists with the management of any disputes or legal complications towards the end of a project.
Accordingly, the parties should carefully examine the contractual terms to confirm that the delay qualifies for an extension, and follow the precise steps laid out in the contract. Most contracts specify a timeframe within which a request for an extension of time is to be made. Often, this also includes a required notice period. Whether or not a time constraint for the provision of notice operates as a complete time bar to a claim for an extension of time depends on the particular drafting of the clause.
Complying strictly with these provisions is vital to ensure the validity of the extension of time claim. Failure to follow the provisions may lead to a complete bar to an extension of time claim altogether.
Many standard-form contracts also impose an obligation on the parties to take all reasonable steps to prevent delays and minimise their consequences.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.