Construction law quarterly

Welcome to the final edition of Construction Law Quarterly for 2024. We have had a bumper year of content and this edition is no different.Our first paper is from Mike Stewart et al. who describe the challenges and issues associated with claims for time under the 1999/2017 FIDIC Red Book. The general provisions for extensions of time are described as well as the general ‘early warning’ duty to minimise and mitigate against claims and disputes. The authors assess how the notice provisions may be seen to be onerous and the steps a contractor would typically have to follow. The challenges associated with time bars, including how to “defeat” these, are also assessed. The paper concludes that it is in the interest of the parties to be acutely aware of the notice procedures and any condition precedents that must be satisfied regarding claims for time and money.Our second paper is an excellent piece from Andrew Croft et al. who discuss the importance of contractors and sub-contractors with design responsibilities ensuring their contracts include appropriate and insurable design obligations. It highlights that professional indemnity insurance (PII) typically covers claims where the insured has breached the standard of performing professional services with “reasonable skill and care”. PII policies often exclude coverage for claims related to strict obligations and fitness-for-purpose obligations. The article examines specific clauses in the NEC4 ECC and JCT D&B 2024 contracts, focusing on the need for careful drafting to avoid uninsured losses due to conflicting or parallel obligations. It also references case law to illustrate the importance of addressing strict and FFP obligations in design contracts.Our third paper, also from Andrew Croft et al., covers the highly topical issues of Artificial Intelligence (AI) in construction. The paper provides an overview of AI, its impact on various industries and in particular construction, and the importance of regulating its use. It highlights the EU AI Act and the UK’s proposed Artificial Intelligence (Regulation) Bill, which aims to establish regulatory principles for AI. The construction industry is a key focus, with AI being used to enhance design, safety, and productivity. The paper also discusses the potential pitfalls of AI, such as over-reliance, data protection issues, and copyright concerns. Despite these challenges, AI offers significant opportunities for innovation and efficiency in the construction sector. As summarised by the authors, the future of AI in this industry depends on continued investment, experimentation, and proper governance.The further paper discusses the Supreme Court’s recent decision in relation to collateral warranties. The key issue was whether a collateral warranty qualifies as a building contract. The court concluded that a collateral warranty does not constitute a building contract, as its obligations derive from the original building contract rather than creating new ones. This ruling clarifies the legal standing of collateral warranties, impacting how they are enforced in construction disputes.Our final paper relates to a case that focusses on a Part 8 claim by Providence seeking a declaration on the interpretation of clause 8.9 in their 2016 JCT Design and Build Contract. The dispute highlights the complexities in contract interpretation, particularly regarding the obligations and rights under specific clauses. It underscores the importance of clear contractual terms to avoid litigation and ensure smooth project execution.As we head into the winter in the northern hemisphere, the CLQ team hope that these papers and case briefings provide an interesting read as the nights draw in but also one that helps keep you all up to date on the latest construction law issues.As ever, should you have a short article or legal update that you would be interested in submitting for inclusion in a future issue please contact the journal editor at journals@icepublishing.com.The content and the opinions expressed have been provided for information purposes only. It should not be relied on as a substitute for specific legal advice on any particular topic.Construction projects are almost always time-critical, and delays to the completion of a project have the potential to result in significant financial losses for the parties. As such, construction contracts generally require contractors to: (i) complete “the Works” by a specified date in accordance with an agreed schedule, (ii) at an appropriate level of quality and (iii) for an agreed price. However, a contractor’s ability to achieve those three objectives can be impacted by factors outside its control.In this article, we consider the circumstances in which a claim for an extension to the time for completion might arise and the procedure to be followed by the parties when making such claims, by reference to the International Federation of Consulting Engineers (FIDIC) Red Book 1999/2017 editions (Red Book 1999/Red Book 2017)1. Pursuant to these standard forms, the type of events that can give rise to a claim for an extension of time are: Where a contractor fails to complete the Works by the specified Time for Completion, it will be in breach of contract and will be liable to the employer for liquidated damages. Sub-Clause 8.4 Red Book 1999/Sub-Clause 8.5 Red Book 20171 provides a mechanism by which a contractor can claim an extension of time where it is able to prove that it has been delayed by reasons which entitles it to an extension. Such claims are usually highly complex, and the contractor bears the burden of proving, by way of contemporaneous documentation, its entitlement and associated relief from the employer’s claim for liquidated damages (i.e. the cause of the delay is specified in the contract as being the employer’s responsibility and the delay event is on the critical path of the contractor’s programme).If the contractor is unable to prove that an event caused actual delay to the progress of its works, the engineer will be unable to grant an extension of time and the contractor will be liable for liquidated damages for the delay. Further, where the contract is governed by English law and the cause of delay is attributable to the employer, the employer is prohibited by virtue of the ‘prevention principle’ from depriving the contractor of its entitlement to an extension of time and holding the contractor to the contractually agreed time for completion.Granting an extension of time does not automatically lead to an award of costs and/or damages. However, where a contractor is granted an extension of time, it may seek to recover its time-related costs of remaining on site longer, its prolongation costs, in accordance with the relevant sub-clauses [2]. Nevertheless, there are two conditions precedent that a contractor must comply with prior to making a claim for an extension of time to the Sub-Clause 8.5 Red Book claims to of but no as to the contractor’s entitlement to an extension of time in the event of delay. such Sub-Clause 8.5 Red Book provides that a contractor’s entitlement to an extension of time is to be in accordance with the and procedures in the to the contract they are not appropriate due to all relevant The FIDIC to Sub-Clause 8.5 that this has been in this that is parties to their there is no standard in However, the FIDIC does to the of Construction and as being delay is a and has been a of in the English minimise and mitigate against claims and a there is a general ‘early warning’ duty under the and Red Sub-Clause 8.4 Red Book the parties to provide of any or future events or circumstances that may delay of the or a this with the contractor in the Red to Sub-Clause there are no specified for to to the duty in the contract, in and particularly where there is a duty of in law the contractor or engineer may have a duty to the of an notice provisions to be but they provide in claims for time and parties to notice the contract and the parties are provided with the to and consider claims when they as to the Works are complete or a dispute has that time, the might be or or might be As of on site to it to time Red Book the procedure for time and/or in the the Red Book a procedure for with the of and of claims for time and The are as The of the Red Book provide as to the to be agreed by the or by the and a the Red Book FIDIC the of to be agreed or which not require a to comply with the claims procedure in Sub-Clause However, there was no as to might constitute a to be agreed or and how this to a The the clauses to which the to be agreed or such from the of a time to issue a of in accordance with Sub-Clause is a condition such that a contractor fails to issue a of the time for completion will not be and the contractor will not be to issue of when the time to for the of a of was in by in for decision in the generally is that time to on the specific or will be in Sub-Clause a contractor can give a Sub-Clause notice for an extension to the time for completion when there will be a delay or when the delay has at to be a can of the time in Sub-Clause is the law of the contract. and and and on the are often in seeking to avoid or a time However, these can be as the are to the contractual to issue of their to claim time and/or to may give rise to further as to whether there was a clear and on which was circumstances where the it is that the contractor may not be to an extension of time, the employer is also not to recover liquidated damages by virtue of its breach of contract to would the employer, in this to from its obligations or provisions in a may provide a to the of time in law of the and the provide that a contract must be in a that is with “the of of the contracts to to its and in a which to the of where a contractor is a in submitting its Sub-Clause it may be to to an employer to on the time in Sub-Clause where the employer had actual of the or rise to the claim and has no in the notice should be acutely aware of the notice procedures and any condition precedents that must be satisfied regarding claims for time and to to these can result in a claim of its Where this is the parties might to principles as the or a duty of under the law of the contract. However, the of in such and it can be particularly to a dispute or court not to give to the it is always to on the and to the terms of the contract and ensure that the are on time and in accordance with the relevant is to the almost is in a the to is which the of on projects with a of design of the of you are a contractor or with design ensuring that contracts up and appropriate and insurable design obligations is of with design responsibility will be to professional indemnity insurance in of their design and contractual professional indemnity insurance policies will to and provide for claims where the insured has breached the law standard of performing professional services with “reasonable skill and PII policies provide against the insured being in the of its professional and/or PII policies usually exclude coverage for claims to of obligations that the law standard of strict and for fitness-for-purpose obligations. with strict obligations and FFP obligations in of design should be to the of the NEC4 ECC provides drafting with the contractor’s that the contractor not liable for a which from its design it to that design the skill and used by professional to the This is a should be when on in As this is an clause and is not as to be an duty of there is a of parallel obligations It would that on its is not in addressing strict obligations and FFP in of for those NEC4 ECC contracts is not to the should of be to the of an with the appropriate to the D&B the NEC4 the JCT D&B provides that the contractor is to skill and in the the new JCT D&B this is in an However, it is to that the duty is the by the and this drafting does not as a complete for The of this in the contractor’s will also on any that are a of as we to the of or contractual relation to the 2024 edition of the JCT D&B a new at clause which provides that under no circumstances will the contractor be to any or which the contractor’s design to be This is a the FFP of clause in the has not been in an that the of parallel obligations and the contractor should with contract or strict or FFP obligations in of design and there is a significant that PII in of strict provide to the the contractor was skill and and provide no in of This to the of uninsured contractors and sub-contractors who are design the and on the one and on the will often be and/or to a PII policies will not in any event are expressed as strict obligations where the contractor is to a particular or achieve specific However, there is a need PII will to ensure that any and are not to those strict or FFP obligations to which the or FFP obligations that or to and may not always be to there is a clause in the contract which design be “reasonable skill and there may be parallel obligations in the contract which or and design breached and are the of a may is a of case law that the importance addressing strict obligations and FFP ensuring that conflicting are not in the various contract on a will be with the case of and this case that when are in contract will be to the of the in the contract. This is a of the need to all contract at the of a project and prior to of the principles in the case of have been and in a of is the case of Construction this the contract a for the to complete the in a that the was not in breach of the Contract. a duty of clause was The in this case that clause of the which an on the to not be relied on to the to ensure that the contractor was not in breach of its obligations under the contract and the was a we the principles in the case of Construction As we we to for in a claim by in relation to a it had to to the in relation to a claim of in the of a at the which in the duty of for was services with design and a strict in relation to not in breach of its contract with the However, the also an duty of clause in relation to design this in the that the of the clause was an skill and was to a on the strict which would have been by under the Despite that the case should the result as in the strict that of the clauses in be seen as for specified of the in they be seen as design obligations. The of the clause was However, this not contracts which are not and/or include design obligations is an in design and may give rise to design obligations onerous than skill and need for an appropriate design and an FFP in of design and should be as of the of design provisions in all and Such clauses need to be to ensure that they the should a dispute and the be by the it is for project to and contract particularly the contract the to comply with those contract obligations in those the of parallel obligations can you to ensure that design obligations in contracts up and are to avoid the of and/or uninsured losses in the event that or a claim is to the authors of this article for further on how we can Intelligence is a of with building and that can and in such a way that would require It also data of a that can impact of AI on the way we and is and has not by those in the This can be seen the of and the of new and to the of AI. way of the of has the Artificial Intelligence which provides into the of AI and its in the has also an AI which their on the of AI and it for and the in have the EU AI the Artificial Intelligence (Regulation) was proposed and to various to AI in the and regulatory principles into law for the first This not as of the it was and will not progress further We may also information from the and AI The to the 2024 the to the of as we to Further, there was of appropriate on those AI from an rights has the construction industry for for with the of and However, its has and in recent particularly with the of AI which was in and such as up and a on the to AI to and the and a new to the of AI on This on how to AI to challenges, efficiency in project and The to this a of will be this is on project it will a precedent the and potential of AI in the in the industry are the of AI and the potential that it particularly in design and construction which have been and in It from the that and in particular are to AI. The that at of are AI of are it on It is that in the industry will are are also the on how are AI and we the in contracts in the AI must consider the to which they to include any contractual provisions to the of and whether they to include any from their for on of AI in the construction industry with for safety, quality and design AI as the potential to construction projects and the industry it that AI is being used to the of design it can to the of and and and and AI in this way can to give also time to on the is to for the time being at AI is being used at the and for rather than with This is by the which that the is for of it often and it However, it is that the of AI will those in the industry to be and particularly by for and can also be used in project project and of site The that in these has been than its in the actual design As the this be an of for efficiency in the AI to or and and contractors to on the and to particular the clear potential it is to be of the potential or associated with the of AI. This should not as a to AI but rather a to ensure that you its in and on is a of on AI the quality and of the that it It is to the AI with and not to on its It is that AI should be used as a to those in the construction industry to up their rather than is on data which is into the that is a or This that or information is used to the the will be the have also been where AI has information must to and the This is particularly when which have been on data from various avoid on quality or their of and on which the will on for future will not be for to on is by AI this would be a breach of the to their services with skill and It will be up to the to the and on its and well as the pitfalls that with being on quality and there are potential for and data contracts provisions which on the of project have been on project this lead to a breach of the or information This is particularly the case for as the information would be to the contracts will of information or project data in specified there will be under with data The on data protection strict obligations on the of will need to consider the data being used any data and whether it is with it is being may also be clear contractual the and of or It is that data into as is to be in breach of The financial and impact of to comply with data protection should not be is also a of copyright issues, in of the information that is being used to the and the of the that are by terms of the information that is being used to the it copyright that the or is not to This lead to copyright by on the AI there are to be as to where the rights and who will any new content the data has from being recent case law that copyright be to by an AI due to of et al. It will be interesting to how the English this issue as the of AI on AI will need to with all of the issues that this is such a new and As a we to an in the of potential there may be that AI will the need for those in the construction industry it can efficiency and at the and the of a and contractors will be for the and It is and with AI to contractors and can and how they can rather than these will those in the construction industry to on the and challenges of how to rather than the and which AI can AI to to the which we have there must be continued will also need to with and the AI in to their on the of AI in the construction industry will need to keep in the associated legal issues and responsibility This will require as to the of AI and in its and decision in this case was a contractor under a JCT Design and Build to to design and a and the The was to a collateral warranty to which is the of this an claim being by and against the whether decision in its be This on as had in the the collateral warranty was a for of the Construction and Act as is of the Act provides as is in the construction industry for collateral to be provided to third parties. The collateral warranty in this case at clause the the has and will to its obligations under the to the decision in its by way of first the as a that a collateral warranty was not a building contract and a and the of the and the collateral warranty was a building contract. The was to the Supreme Supreme the and the for the by that was a to or to the of an The was whether the or of the is the of construction this is as the being under the it to how the or of a collateral warranty is the of construction The is to a of in of construction It is not the of that It not be a collateral warranty rise to the they arise as a result of a building contract. to a of a warranty from and the obligations under the building contract. is to the building contract and there is no or to the this is by the that the under a collateral warranty has no how are The how be or or must the of the employer but are not the to the of this the that clause in a to construction or not there was clause obligations to under the these The of the in clause to all of the contractor’s obligations under the concluded the of whether a collateral warranty was a building contract would on the of that contract. this and it to have a clear the two of contract. This is a which can be and the case the Supreme to the decision in and is that there is in is a construction contract for the purposes of the circumstances where is to the decision making into the was not a The decision of the Supreme a which delays and had a Part 8 claim seeking a declaration against as to the proper construction of clause 8.9 of the 2016 JCT Design and Build the parties. that the dispute in an issue the proper construction of the contract that to than can the its under clause of the JCT in a case where a to give the further notice to in clause has the the in of the employer, had that the to this was The 8.9 of the the circumstances in which its under the by the employer’s was to the of on or but it not Providence a of under clause of the Contract. The a further relevant in the of not by the final date of a of under clause on the of of and the of that specified was to the contractual an or of Providence not give a notice under clause the but the of the of or to breach on 8.9 to the circumstances in which the contractor can its as a of the employer’s The clause a of events that may lead to The to be and whether the contractor has further not whether the of the notice can be the of being the result of a decision or the of an the that the drafting have been of the and of clause was that it to a case where no to give a further notice under clause The any in clause to where the that a notice had not been under clause was the to give that notice had Providence was to give notice under clause of the and its of the clauses was to and cause the to comply with their contractual obligations this the to by the final and a of a specified was the the to that this would a contractor to for where the was or the delay was However, this was a of the potential for a to significant they to their the against on the of standard from as an to interpretation a has been to to the of a particular decision of the a in or a to the of in The there may be when this has to be in to in a of an would generally such in of the it the of interpretation of contractual and it can to the and time in should be short of