NEC 3 Option A contract. Options X5 and X7 have not been selected. In contract data part 2 (no idea why it’s there) it states "liquidated and ascertained damages…£1,000.00 day’. It also says the same in a list of clarifications put forward by the contractor which has been bound into the signed contract. Completion date is stated as “TBC on acceptance of programme”. Are damages now at large because X5 or X7 have not been selected or can they be applied at the £1000 per day?
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This sounds as if the contract has been prepared by someone who does not know what they are doing … and possibly entered into by a contractor who does not know what they are doing contractually.
So firstly, with no X5 specified there is no sectional Completion.
While it might be implied that there are damages of £1,000 per day for late Completion, that would certainly be arguable as the wording you give is very vague and not compliant with the contract terms.
However, from what you have said, it seems that the contract might well have been entered into on ‘time at large’ basis as no contractual Completion Date has been stated.
However, note my “mights” as I suspect there will be lots of other statements etc which need to be taken into accounts well as considering when the contract was actually entered into. The lawyers could make a lot of money from this so I suggest you agree a common sense resolution so that the contract can proceed with both Parties knowing where they stand.
Thank you for your answer Jon.
Apologies, I was writing the above question on my phone and may have missed a key part of the scenario.
The full statement, which appears twice in the contract, is “Liquidated and ascertained damages are £1,000/day should completion of [name of section of work] extend beyond date xx/xx/xxxx”. Obviously the actual name of the section of work and date do appear in the contract.
Do you believe this makes a difference? It does make obvious the intent of both parties when signing the contract?
Again I go back to, from what you have said, there being no option X5 for sectional Completion. There is therefore a strong argument for saying there is therefore no contractual mechanism for adjusting this non-contractual sectional ‘Completion Date’ if that is what it is. If that argument was correct, time would be at large.
In addition, by the wording used above ‘completion’ does not have a capital initial so is only implied that it is the same as the defined term.
Lastly, if the section of work is defined in name only, and not in detail elsewhere, then even more uncertainty is introduced as to what the Contractor has to do to achieve ‘completion’ (small ‘c’) of that section. Sorry, I can’t be more constructive, but it does seem sensible that the parties sit down and agree a supplementary agreement which incorporates the contract terms as written by the Panel ! That gives both Parties contractual certainty for the project to proceed. Otherwise this issue will probably just keep rearing its ugly head to the detriment of the project and both Parties.
On a slightly separate point, and with no X7 delay damages option being specified, there appears, from what you have said, to be no damages for the overall Completion of the works in which case damages would be at cost.