ZTH was the Appointed Contractor for the Design, Fabrication, and Installation: Construction Law Assignment, DBS

Question 1

ZTH was the appointed contractor for the design, fabrication, and installation of the turbine foundations for an offshore wind farm project in Sligo Bay. The contract required ZTH to exercise reasonable skill and care in the design of the foundations, but ZTH also warranted that the design, fabrication, and construction of the foundations would be fit for purpose for 20 years. The contract specified that ZTH was to use an internationally recognized design standard for the design of offshore wind turbine foundations.

The foundations were duly designed and installed, but shortly after the project was completed, it was established within the industry that the design standard contained a fundamental formula calculation error which would result in underperformance of foundations, causing movement requiring remedial works and significantly reducing design life.

The wind farm foundations did indeed start to show signs of movement. This necessitated’ remedial works costing 27million Euros.

1. What general area of construction law is under consideration here?

2. Explain the two principal issues arising out of the above.

3. Was ZTH liable for the costs of the remedial work? Why?

Question 2

A construction contract that contained the following clause:

1. Any of the events which are stated to be a cause of delay is a Relevant Event; and

2. Completion of the Works or of any Section has been or is likely to be delayed thereby beyond the relevant Completion Date,

3. and provided that

(a) The Contractor has made reasonable and proper efforts to mitigate such delay; and

(b) Any delay caused by a Relevant Event which is concurrent with another the delay for which the Contractor is responsible shall not be taken into account

then, save where these Conditions expressly provide otherwise, the Employer shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair and reasonable

1. What is meant by the term relevant event?
2. What is a concurrent delay?
3. Outline two mitigation measure the contractor might employ
4. Explain fully the implications of this clause to the contractor

Question 3

a) A construction contract provides for completion by 2 April 2020. The contract provides for liquidated damages of £10,000 per month. The employer gives a variation that delays completion by 1 year to 2 April 2021.

The contractor delays completion of the works by 1 day to 3 April 2021. There is an extension of the time clause which applies to that variation. The extension of time clause requires, as a condition precedent to any extension of time, a notice of delay to be given by the contractor within 1 hour of any variation. The contractor gives notice 1½ hours after the variation.

1. Outline the key legal issues presented by the above.
2. Explain to the contractor his legal entitlements in this instance.

b) A building contractor quotes a price of €124,500-00 to construct a dwelling-house for you and undertakes to have it complete by the 1st August 2020.

1. What are the express terms of this agreement?
2. Outline five terms/obligations that will be implied into this agreement.
3. Outline five terms/obligations that will not be implied into the agreement.

Question 4

a) A clause in the contract read as follows: ‘if sufficient rock fills to meet the requirements of the works cannot be obtained, the engineer may (in writing) direct the contractor in writing to obtain rock fill from other approved locations.

The contract also contained a clause allowing the engineer to omit any of the works’.

The engineer, gave a verbal instruction to the contractor to omit the filling works.

The engineer then subsequently awarded the filling works to another contractor, at a far cheaper rate.

1. What area of construction contract law does this scenario relate to?
2. Can the engineer omit the works from the contractor? Why?
3. Explain the remedies available to do the first contractor.

b) As part of a residential development project, EAB (main contractor) was required to install an underground heat network. EAB invited tenderers. CDL became the successful tenderer and was then engaged by EAB to excavate the road around the development with the goal of eventually installing pipes. CDL’s tender was, however, accompanied by an email which stated that the offer was made on the basis that:

A feasibility study had been undertaken confirming a clear and unrestricted corridor for laying down the heat network

That there was no allowance for diversion of mains and services, disposal of contaminated materials, and breaking out of obstructions in the trench.

That email was not part of the main Sub-Contract document that was entered into by the parties. However, it was appended to the Sub-Contract, along with the post-tender review minutes which reiterated the exclusion. The relation of those documents to the main Sub-Contract was then regulated by Clause 1.3.5 of the Sub-Contract which provided that the Sub-Contract documents took precedence in the event that there were inconsistencies. A dispute arose when CDL encountered adverse ground conditions. EAB position was that Clauses 2.1.7 and 2.1.8 of the Sub-Contract conclusively allocated risk of the ground conditions onto CDL. Those Conditions stated that:

“ 2.1.7 The Sub-Contractor shall be deemed to have inspected and examined the site and its surroundings and to have satisfied himself before the date of the Sub-Contract as to the nature of the ground, the sub-surface and sub-soil; the form and nature of the site; the extent, nature and difficulty of the SubContract Works; …. and in general to have obtained for himself all necessary information as to risks, contingencies and all other circumstances influencing of (sic) affecting the Sub-Contract Works.

2.1.8 Notwithstanding any other provision of this Sub-Contract, the SubContractor shall not be entitled to any extension of time or to any additional payment, damages, or direct loss and/or expense on the grounds of any misunderstanding or misinterpretation of any matter set out in clause 2.1.7, or his failure to discover or foresee any risk, contingency or other circumstance (including, without limitation, the existence of any adverse physical conditions or artificial obstructions) influencing or affecting the Sub-Contract Works.

1. What are the key legal issues presented by the above?
2. Who carried the risk for ground conditions in this instance? Why?

Question 5

a) You are assisting a client in contract/tender preparation. The client wishes to include a liquidated damages provision in the contract so as to ensure the contractor finishes on time. The client wishes to call it a penalty charge in the contract. The client is unsure of the mount to levy and suggests that an overall figure of 15% of the contract value be included. The client wishes to avail of phased completion (per floor) as he is constructing a three-story building with three apartments on each floor. A contractor is appointed and works commence. The relationship turns sour and the project suffers from the delay.

1) What are the legal ramifications of using the term ‘penalty charge’?
2) Is the figure of 15% of the contract value valid liquidated damage? Why?
3) The client wishes to impose LAD’s of 10% as the upper two floors were not delivered on time. Is this possible? Why?
4) If you were working for the contractor, what advice or course of action would you recommend them to take? Why?

b) You are the QS for the client and the contractor lands in your office with three lever arch files. He passes you a letter which alleges the following – ‘that over the project to date the architect has issued 25 architects instructions requiring variations and all those instructions has resulted in a delay to the completion date of 35 days and the cost of the overrun is €78,000.

1) What type of claim is the contractor making?
2) Explain the problems with such types of claims?
3) What protection could you include in a contract to prevent or frustrate such a claim?

Question 6

a) Model or standard forms of contract forms of building/construction contracts may be used by buyers and sellers as the basis for their contractual agreement.

1) Identify at least four examples of model contract forms and outline where they are likely to be used and any principal differences between them. (Not covered in class)

2) Explain TWO advantages and TWO disadvantages of using standard and model form contracts as the basis of legally binding construction agreements.

b) On the way back to the site office from conducting a site measurement, you noticed a machine excavating a trench for a new sewer. The trench was nearly two meters deep and in the trench was a worker. The ground was particularly wet and no shoring or lateral supports was provided in the trench. You are aware that the site manager went home an hour earlier as he was feeling ill.

1) What responsibility as a professional member of staff do you have?
2) What should you do?
3) On a separate issue are Quantity Surveyors classed as a ‘designer’ under the Health and Safety Construction Regulations?