Construction Law/Sole Remedy

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Question
Hi Manish,


Thank you for taking the time out to read my query.

I am hoping you can help me with some difficulty I am having with a non-standard contract.

Firstly, the contract I am referring to has an unusual clause relating to EOT claims which is as follows.

"Sole Remedy

An extension of the Completion Date shall be the
Contractor's sole remedy for any delay or for any
default or breach of the Contract on the Company's
part other than those expressly provided for in Clauses
29 and 35 and Sub-clause 52(a) and the Contractor
shall not be entitled to any increase in the Contract
Price or any damages, costs or expenses in
connection therewith, or arising there-from"

The clause's and sub-clause mention above are for (29) Cyclone, 35) Suspension of works and (52 a) Default by Company.

To me this suggests that whether a variation affects the critical path or causes a delay to the completion date or not is irrelevant as there is no provision in the contract to claim for costs associated with any such delay.

My question is; in this case, can the contractor have disregard for whether a variation affects the critical path or not when pricing a variation and include an item for additional preliminaries due to an increase in the scope of works.

That is to say that while this contract recognises that variations have a delay on the completion date, it does not however appear to recognise the costs associated with such a delay. This is why I figured preliminaries should then be priced into all variation claims.

Is this correct in thinking? Should I only price non-time related preliminaries in?

The following is the clause relating to variations.  

“34 Variations

Variation

(a) The Engineer, during the performance of the Works,
may by notice direct the Contractor to alter, amend,
omit, reduce, add to or otherwise vary any of the
Works on and from the date specified in the notice.
The Contractor shall comply with the notice and shall
be bound by the same conditions as though the
contents of the notice and any variation thereby made
were included in the Contract.
Cost of Variation
(b) The difference in cost (excluding Indirect Transaction
Taxes), if any, including a reasonable allowance in
respect of Goods already prepared and Works already
performed but not required, caused by variations
directed by the Engineer shall be added to or deducted
from the Contract Price as the case may require.
(c) To the extent that the rates for variations are specified
in a Schedule, they shall be used by the Contractor to
calculate the cost of a variation, but otherwise the cost
of a variation shall be estimated by the Contractor at
the lowest reasonable cost consistent with sound
construction practices”

Answer
Dear Liam,

My apologies as I couldn't post timely reply to your question.

Presuming that your have shared all the relevant information with me; I seem to disagree with your understanding.

I couldn't find anywhere in the said clauses which says that any variation requiring more time is not reimbursable.

Could you please send me more details enabling me to advise further.

Thanks

Construction Law

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Manish Gupta

Expertise

I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.

Experience

7 Years with Contractors 12 plus Years with Owners & Consultants

Organizations
Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

Education/Credentials
MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

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