support@assignmentexperts.co.uk + 44 7340 9595 39
Register Login

Custom-Written, AI-Free & Plagiarism-Free Academic Work by Assignment Experts

Assignment Experts UK is a trading name of AKOSZ TEC LTD (Company No. 11483120). View on Companies House

Asbestos, Delay and Liquidated Damages in JCT Contracts

Assignment Brief

Assessment Scenario & Task Scenario:

Nae Pasaran Construction Limited (“the Contractor”), submitted a tender on 22 February 2018 to BigBeat Developments Limited (“the Employer”) for the refurbishment and fit out of the former E Griffiths Hughes Chemical Works (“the Works”) built in 1915 on Peru Street in Salford (“the Site”).

Following negotiations with a number of stakeholders and perspective tenants, full planning permission for a £60m conversion to transform the venue into an entertainment complex to be named “Tokyo 2020” which would include: a theatre, a 1970’s themed discotheque, restaurants, and bars (whilst retaining the existing façades and most of the original features) was granted.

Following a tender evaluation process the Employer advised the Contractor that their tender was likely to be accepted subject to the Employer getting finance in place. The Contractor commenced the Works on the Site upon receipt of a letter of intent dated 01 April 2018 from the Employer which stated:

“It is our intention to enter into a contract with Nae Pasaran Construction Limited for the refurbishment of the former E Griffiths Hughes Chemical Works. The refurbishment is to commence immediately with the strip out and enabling works (“the Soft Strip”) in accordance with the drawings and specifications attached to this letter. On condition that you take full responsibility for all unforeseen work during the validity of this letter of intent, you will be paid on a cost-plus overheads (8%) & profit (4%) basis. You should immediately mobilise to site and proceed regularly and diligently. The Guaranteed Completion Date is crucial to this project and we must open the complex at noon on 24 July 2020 to coincide with opening ceremony of the XXXII Olympiad in Tokyo, Japan”. On 27 July 2018 a JCT 2016 Standard Building Contract With Quantities (SBC/Q) form of contract (“the Contract”) was signed by the Employer and the Contractor in respect of the Works. Incorporated into the Contract Documents was a Refurbishment / Demolition Asbestos Containing Material Survey (“the Asbestos Survey”) which confirmed that whilst asbestos had been identified in the existing structure, following the stripping out of the asbestos by a specialist asbestos removal contractor (“Sedate”), all asbestos had been eliminated and the Site was certified as being “fit for reoccupation”. Included in the Contract Particulars was a Date for Completion of 23 July 2020 and the following provisions relating to liquidated damages: “...liquidated damages are £200,000 for the first day and then £20,000 per day for every subsequent day thereafter…” On 14 May 2018 the Contractor uncovered material in the basement of the Site which appeared to be asbestos. The Contractor’s construction manager immediately stopped work in the affected areas of the Site and requested an instruction from the Contract Administrator who issued a written instruction requiring the Contractor to immediately arrange tests on the suspect material and to then “…remove all asbestos containing material in order that the Works can be completed by the Date for Completion…” At the request of the Contractor, Sedate attended the Site and confirmed that the suspicious material contained asbestos fibres. Sedate advised the Contractor that due to the nature and location of the asbestos containing material they would only be willing to carry out the safe removal of the asbestos for the Contractor on a dayworks basis. On 27 July 2018, the Contractor gave notice to the Contract Administrator in requesting an extension of time and payment of loss and expense in relation to delays and disturbance to the regular progress of the Works arising as a consequence of the asbestos issues. By the time the asbestos containing material had been removed a critical delay to the Date for Completion of 10 days had occurred. At a subsequent site valuation, the Contractor’s graduate quantity surveyor included an item under the Variation section for the removal of the asbestos based upon daywork sheets signed by the Clerk of Works. Assessment Information/Brief 3 The Quantity Surveyor rejected the valuation of the asbestos removal on a dayworks basis and referred to a clause contained in the Preliminaries section of the Contract Bills which stated: “…No work will be valued on a daywork basis unless written notice of the commencement of daywork is given to the Employer…” The Quantity Surveyor pointed out that whilst notices in relation to extensions of time and loss and expense were submitted by the Contractor no such notice relating to dayworks was given by the Contractor. After completion of the Works the Contractor received a letter from the Contract Administrator responding to the Contractor’s request for an extension of time and loss and expense in relation to the asbestos matter which stated. “…I refer to your requests for an extension of time and loss and expense relating to the discovery of asbestos. Whilst I am sympathetic to your predicament I have been reminded by the Employer’s commercial director that you were aware at the time of entering into the Contract that there was asbestos in the basement. I am therefore advised that you accepted the time and money risk associated with this problem when you signed the Contract. In the circumstances I have no alternative but to reject your requests for an extension of time and loss and expense. Accordingly, as the Works achieved practical completion 10 days after the Date for Completion I have advised the Employer to deduct liquidated damages in the sum of £380,000 from your final payment…” The Contractor has recently discovered that name of the venue is now to be called “Ramoaners 2020”.

Task:

You are required to prepare a report of 2,500 words in length (the word count excludes references, bibliography and cover sheet) which provides advice to the Contractor in relation to the contractual position with regard to the following:

  1. Whether the Contractor is entitled to be paid additional monies in respect of the removal of the asbestos and, if so, what the basis of the valuation should be.

  2. Whether in principle the Contractor is entitled to an adjustment to the Completion Date and to payment for loss and expense in respect of the discovery of asbestos.

  3. Whether the Contract Administrator’s response to the request for an extension of time and loss and expense satisfies the obligations placed upon the Contract Administrator under the Contract.

  4. What the position is with regard to the proposed deduction (and level) of liquidated damages.

Your advice should be fully supported by reference to the relevant provisions of JCT SBC/Q 2016 together with relevant cases and any authorities in statute (if any) which should all be cited and referenced in accordance with the Harvard (APA 6th) style of referencing. Please also include separate lists of all cases and / or statutes (if any) referred to in alphabetical order.

On successful completion of this assessment, you will be able to:

Knowledge and Understanding

  1. Demonstrate a theoretical and practical understanding of the reasons why disputes arise in the construction industry and the various mechanisms for avoiding and resolving them.

  2. Explain the various principles of substantive law which are relevant to disputes in the construction industry.

  3. Demonstrate an understanding of how these legal principles influence professional practice within the industry.

  4. Apply relevant principles of law to a range of problem scenarios and provide articulate and logical solutions.

  5. Critically evaluate the appropriateness of current professional practice in the context of relevant legal rules and identify areas requiring reform.

Transferable Skills and other Attributes

  1. Become a confident, independent learner.

  2. Develop further competence in the use of a range of legal (and sometimes non-legal) research sources, in both paper and electronic format.

  3. Demonstrate the ability to communicate in writing and in a professional, ethical and unambiguous fashion.

  4. Appreciate the broader context, legal, economic and social, within which disputes arise.

  5. Solve practical problems through the application of authoritative rules of law, both substantive and procedural, with an awareness of the relationship with other areas of law

100% Plagiarism Free & Custom Written,
tailored to your instructions

Sample Answer

Introduction

This report provides contractual advice to Nae Pasaran Construction Limited in relation to the discovery of asbestos during refurbishment works at the former E Griffiths Hughes Chemical Works in Salford. The dispute raises common but complex issues within construction law, particularly concerning valuation of variations, extensions of time, loss and expense, and the operation of liquidated damages under the JCT Standard Building Contract With Quantities 2016.

Refurbishment projects, especially those involving historic buildings, are inherently risky due to unknown site conditions. Asbestos remains a frequent cause of delay and dispute, often testing the balance of risk allocation agreed at contract formation. This report analyses the Contractor’s entitlement to payment and time, the adequacy of the Contract Administrator’s actions, and the validity of the Employer’s deduction of liquidated damages. All advice is grounded in the relevant provisions of JCT SBC/Q 2016, supported by case law and legal principles applicable to construction contracts.

Entitlement to Payment for Asbestos Removal and Basis of Valuation

The first issue is whether the Contractor is entitled to additional payment for the removal of asbestos discovered in the basement and, if so, how that work should be valued.

Under JCT SBC/Q 2016, asbestos removal instructed after contract execution is capable of constituting a Variation under clause 5.1, as it involves work not originally contemplated in the Contract Bills. The Asbestos Survey incorporated into the Contract confirmed that asbestos had been identified and removed and that the Site was certified fit for reoccupation. This certification is crucial. It reasonably entitled the Contractor to rely on the Site being free from asbestos at the time the Contract was signed.

The Employer’s argument that the Contractor accepted the risk of asbestos is weak. While the Contractor knew asbestos had previously existed, the contractual documents expressly stated that it had been eliminated. In line with the principle in Bacal Construction v Northampton Development Corporation [1975], where tender documents misrepresent site conditions, the Employer may bear responsibility for the consequences.

The Contract Administrator issued a written instruction requiring the Contractor to arrange testing and to remove the asbestos. This instruction satisfies the requirement for an instructed Variation. Once instructed, the Contractor is entitled to payment.

Valuation is governed by clause 5.6. Where work cannot be valued using contract rates or is not of similar character, a fair valuation applies. Dayworks valuation is permissible under clause 5.7, provided contractual requirements are met. The Quantity Surveyor relied on a preliminaries clause requiring written notice of commencement of dayworks.

However, the asbestos removal was undertaken following an express instruction and on advice from the Employer’s nominated asbestos specialist, Sedate, who would only undertake the work on a dayworks basis. The daywork sheets were signed by the Clerk of Works, indicating Employer knowledge and acceptance of the valuation method. In practice, courts have been reluctant to allow employers to rely on procedural technicalities where work has been clearly instructed and accepted. This approach aligns with the reasoning in Henry Boot Construction v Alstom Combined Cycles [2005], where substance was preferred over form.

Accordingly, the Contractor has a strong entitlement to payment for the asbestos removal, valued fairly on a dayworks basis, supported by signed records and the lack of alternative valuation methods.

Entitlement to Extension of Time and Loss and Expense

The discovery of asbestos caused a critical delay of 10 days. The key question is whether this entitles the Contractor to an extension of time and recovery of loss and expense.

Clause 2.26 of JCT SBC/Q 2016 lists Relevant Events entitling a Contractor to an extension of time. These include instructions issued under clause 3.10 and matters affecting the regular progress of the Works. The asbestos removal instruction qualifies as a Relevant Event. It was unforeseen, unavoidable, and directly impacted the critical path.

The Employer’s position that the Contractor accepted the risk is inconsistent with the contract documentation. The Asbestos Survey explicitly stated the Site was asbestos free. In Plant Construction v Clive Adams Associates [2000], it was confirmed that contractors are entitled to rely on information provided by the employer unless clearly disclaimed.

Loss and expense is addressed under clause 4.20. Where a Relevant Matter causes the Contractor to incur direct loss and expense, reimbursement is due. The asbestos removal instruction qualifies as a Relevant Matter under clause 4.21. The Contractor submitted timely notices for extension of time and loss and expense, satisfying procedural requirements.

Therefore, in principle, the Contractor is entitled to both an extension of time of 10 days and payment of associated loss and expense.

Adequacy of the Contract Administrator’s Response

The Contract Administrator is required to act fairly, impartially, and in accordance with the Contract. This duty was confirmed in Sutcliffe v Thackrah [1974], which established that a Contract Administrator must exercise independent professional judgment rather than act as the Employer’s agent.

The response rejecting the Contractor’s claims relied heavily on the Employer’s commercial director’s view rather than an objective assessment of the Contract provisions. There is no evidence that the Contract Administrator properly assessed the Asbestos Survey, the instruction issued, or the Relevant Events and Matters under the Contract.

Clause 2.28 requires the Contract Administrator to fairly assess extensions of time. A blanket rejection without contractual analysis is unlikely to satisfy this obligation. Similarly, loss and expense claims must be considered on their merits, not dismissed due to employer pressure.

On this basis, the Contract Administrator has arguably failed to discharge their contractual duties, exposing the Employer to challenge and potential dispute resolution.

Liquidated Damages Position and Level

Liquidated damages under JCT SBC/Q 2016 are only deductible where the Contractor is culpably late. If an extension of time should have been granted, liquidated damages cannot be levied.

Given that the 10 day delay resulted from an instructed Variation and a Relevant Event, the Date for Completion should have been adjusted. As confirmed in Peak Construction v McKinney Foundations [1970], failure to grant an extension of time prevents the employer from relying on liquidated damages and risks setting time at large.

Even if liquidated damages were theoretically applicable, the calculation appears excessive. The deduction of £380,000 suggests misapplication of the contractual rate, which specifies £200,000 for the first day and £20,000 per day thereafter. This figure must be applied strictly and accurately.

Accordingly, the proposed deduction is highly vulnerable to challenge.

paypal checkout

The services provided by Assignment Experts UK focus on delivering original, custom-written academic work. All assignments are prepared by human writers without automated content generation tools and are carefully reviewed to maintain originality and academic integrity.

Discover more


Assignment Experts UK
is a trading name of AKOSZ TEC LTD (Company No. 11483120).

View on Companies House

Explore Our Samples

We've produced some samples of what you can expect from our Academic Writing Service - these are created by our writers to show you the kind of high-quality work you'll receive. Take a look for yourself!

View Our Samples

Recent Papers

No. It depends on what the contract documents say and what was reasonably known.

Yes, where work was clearly instructed and accepted in practice.

Because they must apply the contract fairly, not protect the employer.

Only if the contractor is truly in culpable delay.

Mark

Got told my advice was “commercially realistic”. That never happens. Massive relief.

United Kingdom

★★★★★
Rachel

The JCT clauses were spot on. Tutor said it read like professional advice.

United Kingdom

★★★★★
Simon

Saved my resit. Clear, confident, and actually made sense.

United Kingdom

★★★★★
Sarah

Did not sound fake or over legal. Got a solid 65 and I was panicking hard.

United Kingdom

★★★★★
✍️ Post Your Review