Certain standard forms of contract, such as those in the CCDC, NEC and FIDIC suites for example, are very prescriptive as to when and how notices for adjustments to the completion date or the contract sum are to be made, and what form they should take.
In many forms of contract, the timely submission of a notice is a condition precedent to obtaining the relief sought, and the failure to submit a notice on time will result in the loss of entitlement. In addition, a failure by a contractor or subcontractor to give an early warning of a potential event can, under certain contracts, reduce any entitlement to time or money, even if the notice provisions are met.
Most forms of contract adopt a ‘two-stage’ approach; the initial ‘bare’ notice is followed by a more detailed submission comprising particulars of the event and its effects.
But, what if the conditions of contract do not clearly set out the criteria to be met by the claiming party?
And, what are the requirements for an effective notice?
Ordinarily, the essential purpose of a ‘notice’ is to provide the receiving party with the opportunity to take some action – as far as may be possible – to mitigate the effects of the event, or to consider and/or adopt a different approach, and also to make financial provision for the impact of the event which is the subject of the notice.
When submitting a notice, the following considerations should be given:
- Are there any time bars in the contract which would preclude your entitlement if they are not met? Be particularly aware of ‘standard’ timescales which may have been modified through amendments.
- Has the notice been communicated effectively and in accordance with the contract? Is there a prescribed recipient for notices in the contract, and does it specify an effective means of communication? Some contracts, for example, require the notice to be served as a separate communication, and others require specific clauses to be referenced within the notice to be effective.
- Have you clearly identified and described the event which is causing, or is likely to cause, delay or disruption, or incur additional cost?
Once the initial notice has been submitted, your focus needs to move to assessing and substantiating the time and cost impact of your claim. Most forms of contract require this information to be provided within a certain time period after the notice has been served, and several direct that this information is to be updated at regular periods thereafter.
Matters to consider at this stage include:
- What records do you have to support your position?
- Have you provided a clear narrative to accompany your submission?
- Have you updated the schedule and impacted those ‘critical path’ activities which will directly impact the date for completion of the project, such that you can demonstrate cause and effect?
- Have you identified, and can you support, with evidence, the financial impact resulting from the event?
- If the effects are continuing, are you updating your client regularly?
Of course, many contractors and sub-contractors delay providing this amount and level of detail until a formal ‘claim’ is submitted and provide only the bare minimum of information in the interim. This may be adequate in some cases, assuming that there are no conditions precedent which preclude this approach; albeit contemporaneous collation of records to support the subsequent detailed claim should remain a priority.
However, the submission of a comprehensive notice, properly substantiated, can often be persuasive to a client, and may avoid a protracted exchange of correspondence and ultimately, a costly and, perhaps unnecessary, dispute.
We have interactive training sessions that can be delivered remotely to head office staff, or site-based contractor and sub-contractor teams. Please feel free to give us a call (1 587 434 9892) or email us at canada@driver-group.com if you are interested in receiving more information on these training sessions or if you would like to discuss any related issues.
This article was adapted from an article written by Driver Trett Technical Director, Andrew Smith, who is based in the UK. It is intended to provide guidance only, and does not represent legal advice. The Covid-19 situation is constantly evolving, and every contract is different. Please ensure that you check your contract terms carefully.