Conditions Precedent Brian E. Rawling of Brian E. Rawling & Associates

Since the introduction of the forms of number of days after the effects of an contract for the airport core projects, event have ceased (often 28 days); contracts have increasingly included • if the effects of an event are prolonged conditions precedent. (as is often the case in construction) then interim particulars are often required at A condition precedent is a provision, which intervals not exceeding a specified stipulates that a contractor (or a sub- period (often 28 days). contractor under a sub-contract) must comply with certain specified procedures if Provisions relating to conditions precedent he is to avail himself of other contractual will be interpreted contra proferentem, provisions. If a contractor (or sub-contractor) hence, they should be carefully drafted. does not comply with the certain specified However, the law will not protect a party procedures then he is deemed to have who has made a bad bargain and if, for waived his rights under the contract, or at instance, the notice period is 7 days, then a law, to the remedies, which would otherwise contractor must comply with that provision have been available to him. if he is to avail himself of the contractual remedy. The remedies which are usually made the subject of conditions precedent are:- Extensions of Time • extensions of time; • financial claims for additional payment. As a remedy for excusable delays, i.e. delays caused by an employer or delays for Conditions precedent is a legal term and it is which an employer has agreed to accept the established law (there may be a few risk as regards to time, e.g. insurable risks exceptions) that if the conditions precedent (the neutral causes of delay), a contractor is are not fulfilled then a contractor has no entitled to an extension of time and such recourse to the remedies which were the provisions keep alive an employer's right to subject of the conditions precedent. recover damages for delay, often stated to be liquidated and ascertained damages. Common Requirements If the provisions are made the subject of A contractual provision for conditions conditions precedent (e.g. notice, interim precedent usually provides for the particulars and final particulars), and the following:- contractor does not comply with the • a notice to be given by the contractor to conditions precedent, then the consultant the consultants, often specified to be cannot, contractually, award an extension of within a certain number of days (often time. 28 days) after the start of an event for which the contractual remedy is being However, an employer's reflections at the sought; contractor's misfortune in failing to comply • the provisions of particulars in sufficient with the conditions precedent (BERA have detail so that the consultants can had experience of a claim being rejected understand the claim, (i.e. the where the notice was issued one day after contractual remedy being sought), and to the expiry of the specified period) may be form his own opinions on the matter. short-lived as the contractor may have a The provision of such particulars is legal remedy. often specified to be within a certain

That legal remedy is the doctrine that a This is where conditions precedent can be wrongdoer cannot benefit by his own more fully enforced but again the legal misdeeds. Therefore, based upon the legal doctrine that a person cannot benefit by his doctrine that a person cannot benefit by his own default still applies. Therefore, own misdeeds, if the cause of delay is conditions precedent related to payment for employer's default (or his agent's default) additional work cannot be enforced as an and such default prevents the contractor employer cannot benefit from an instruction from completing by the specified date for to carry out additional work and get that completion, then the employer cannot work free of charge if the contractor fails to recover liquidated damages as he would be comply with the conditions precedent. benefitting by his own misdeeds. The contractor would still be bound by the need Performance to complete within the time which would have been extended had he complied with The Swire Properties Limited Standard the conditions precedent so there is no Form of Building Contract contains benefit to the contractor caused by his conditions precedent which are linked to failure to comply with the conditions real performance and aim to benefit both the precedent. contractor and employer if they are observed. There is another problem and that is what happens where, after the event which caused With regard to extensions of time the delay, and for which the contractor failed to conditions precedent in clause 23 sub-clause comply with the conditions precedent, the (3) of the Swire Form are:- employer causes further delay. Most contractual provisions which are drafted do ".. the Main Contractor shall:- not cater for this situation. (a) constantly use all practicable measures to anticipate, prevent or mitigate any Therefore, for an employer, the only benefit delay to the Works; and of conditions precedent relating to (b) submit the notice referred to in sub- extensions of time is that the extensions of clause (1), and shall include therein such time for neutral causes of delay may be details of the cause, or causes, of delay avoided if the contractor does not comply and the anticipated effects of the said with the conditions precedent. cause or causes, as are then reasonably foreseeable (including without limitation When a consultant relies on a failure to any paragraph of sub-clause (1) relied comply with the conditions precedent, as he upon); or she must do, and rejects an otherwise (c) thereafter keep such records and submit meritorious claim for an extension of time such further information in connection for an event of employer's default, and such with the said cause and effects as the event causes delay to completion, then the Architect shall reasonably require. administration of the time aspects of a (d) prepare and submit to the Architect, for contract become in disarray. each event which the Main Contractor contends has caused delay, full and Therefore, employers should think twice detailed particulars of the effects thereof about such provisions before drafting their and the practicable measures extension of time provisions. implemented by the Main Contractor pursuant to sub-clause (3)(a); and Claims for Additional Payment (e) prepare and submit to the Architect, with the aforementioned full and detailed particulars, a delay

demonstration programme based upon progress of the Works, or of any part the Construction Programme referred to thereof:- in clause 6 of Schedule 3 hereto, or if more than one month has elapsed since (a) constantly use all reasonable means to the Construction Programme was anticipate, prevent and/or mitigate the prepared, the latest monthly update incurring of any such Direct Loss and/or thereof referred to in clause 7 of Expense; and Schedule 3 hereto, (b) make the written application referred to (i) the delay demonstration programme in sub-clause (1) within twenty-eight (28) shall show the Main Contractor's days after it has become, or should intentions immediately before the start reasonably have become, apparent to of the event which caused delay, the him that the regular progress of the effects of the event, the Main Works, or of any part thereof, has been Contractor's revised intentions after or is likely to be affected as aforesaid; assimilating the effects of the event and and the as-built record of the affected (c) thereafter keep such records and submit activities; such further information in connection (ii) the delay demonstration programme with the said circumstances and Direct shall take into account the practicable Loss and/or Expense as the Architect measures referred to in sub-clause (3)(a) shall reasonably require; and and any measures taken by the (d) in support of his application, and within Employer to mitigate delay; ninety (90) days of the end of the effects (iii)the full and detailed particulars and the caused by the event which materially delay demonstration programme shall affected the regular progress of the jointly establish the nexus between the Works, or of any part thereof, submit to event, or events, causing delay and the the Architect such information as should effects thereof and, if, in the opinion of reasonably enable the Architect to form the Architect, this nexus has not been an opinion as aforesaid together with established, then the Main Contractor such details of such Direct Loss and/or shall provide further particulars to prove Expense as is reasonably necessary for his contentions or withdraw the claim. such ascertainment. This clause clearly sets out the procedures required and a contractor can Again this clause clearly sets out what is be left in no doubt how it has to proceed required for a contractor to succeed with a once an event occurs and what it has to financial claim. The Swire contractual do to establish its claim”. provisions incorporating conditions precedent strive to achieve improved This clause clearly sets out the procedures performance (i.e. constantly use all required and a contractor can be left in no practicable measures etc.) and not just place doubt how it has to proceed once an event obstacles in a contractor's path when occurs and what it has to do to establish its seeking his rights under the contract. Such claim. improved performance is intended to benefit both the contractor and employer. A With regard to claims for additional contractor who constantly uses all payment, the conditions precedent in clause practicable measures to reduce delay and to 24 sub-clause (3) of the Swire Form are:- mitigate cost will benefit an employer by earlier completion and less additional ".. the Main Contractor shall, for each event expense than can occur on a contract where which has materially affected the regular there are no such obligations (e.g. where the obligations refer to best endeavours).

conditions precedent when drafting their Employers and consultants should be aware contracts. of the pitfalls as well as the benefits of (Adopted from the HKIS Newsletter 10(6)b July 2001)