The Risk of Delay:

Extension of Time and Liquidated Damages

under the Red, Yellow and Silver Books 1999

by

Edward Corbett
Corbett & Co, London

Introduction

In this paper, the provisions for time and liquidated damages are considered. Strictly, the only
function of an extension of time is to relieve a contractor in delay of liability for liquidated
damages. In practice, an extension of time is also the basis for the calculation of a prolongation
cost claim. Time and cost are treated separately, however. A typical claim clause, such as clause
2.1 is as follows:-

“If the Contractor suffers delay and/or incurs Cost as a result of a failure by the
Employer to give any such right or possession within such time, the Contractor shall give
notice to the Engineer and shall be entitled subject to Sub-Clause 20.1 [Contractor’s
Claims] to:
(a) an extension of time for any such delay, if completion is or will be delayed, under
Sub-Clause 8.4 [Extension of Time for Completion], and
(b) payment of any such Cost plus reasonable profit, which shall be included in the
Contract Price.”

The regimes for time and damages are essentially the same in the three Books. The main
difference, apart from the absence from the Silver Book of the Engineer, is that the Silver Book
has fewer grounds for extension of time than the others. The Red Book is quoted unless otherwise
indicated.

Extensions of Time for Completion

Clause 8.4 is the most important clause:-

“The Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to an extension
of the Time for Completion if and to the extent that completion for the purposes of Sub-Clause 10.1
[Taking Over of the Works and Sections] is or will be delayed by any of the following causes:

(a) a Variation (unless an adjustment to the Time for Completion has been agreed under Sub-
Clause 13.3 [Variation Procedure]) or other substantial change in the quantity of an item of
work included in the Contract,

(b) a cause of delay giving an entitlement to extension of time under a Sub-Clause of these
Conditions,

(c) exceptionally adverse climatic conditions,

(d) Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or

governmental actions, or
(e) any delay, impediment or prevention caused by or attributable to the Employer, the
Employer’s Personnel, or the Employer’s other Contractors on the Site.
If the Contractor considers himself to be entitled to an extension of the Time for Completion, the
Contractor shall give notice to the Engineer in accordance with Sub-Clause 20.1 [Contractor’s
Claims]. When determining each extension of time under Sub-Clause 20.1, the Engineer shall
review previous determinations and may increase, but shall not decrease, the total extension of
time.”

The list of grounds for extension of time has one addition at (d) and now omits the general
reference to “other special circumstances” which featured in the 1987 Red Book. The result
must be a narrower entitlement to extensions of time as ground (d) is likely to be less useful than
the unspecific “special circumstances”.

Clause 8.5 (Delays caused by Authorities) provides an additional ground:-

“If the following conditions apply, namely:

(a) the Contractor has diligently followed the procedures laid down by the relevant
legally constituted public authorities in the Country,
(b) these authorities delay or disrupt the Contractor’s work, and
(c) the delay or disruption was Unforeseeable,
then this delay or disruption will be considered as a cause of delay under sub-
paragraph (b) of Sub-Clause 8.4 [Extension of Time for Completion].”

Extension of Time and Liquidated Damages by Edward Corbett, Corbett & Co 2

This presumably was considered too lengthy and complex to be included within the extension of
time provision itself. This clause will be a welcome addition to many Contractors whose
expectations that a Government contract would ensure Government co-operation have been
disappointed. Recovery of additional money as well as additional time will be more difficult,
particularly if two different branches of Government are involved.

Although Clause 8.4 talks of entitlements, the concept of fairness is brought in indirectly by a
reference to Clause 20.1 (Contractor’s Claims) which in turn requires the Engineer under Clause
3.5 (Terminations) to come to a fair decision about the Contractor’s entitlement to extension of
time.

Provision for damages in the event of delay has been updated to remove Anglo-Saxon references
to “liquidated” damages and to the distinction between a penalty and liquidated damages. Clause
8.7 (Delay Damages) says as follows:-

“If the Contractor fails to comply with Sub-Clause 8.2 [Time for Completion], the
Contractor shall subject to Sub-Clause 2.5 [Employer’s Claims] pay delay damages to the
Employer for this default. These delay damages shall be the sum stated in the Appendix to
Tender, which shall be paid for every day which shall elapse between the relevant Time for
Completion and the date stated in the Taking-Over Certificate. However, the total amount
due under this Sub-Clause shall not exceed the maximum amount of delay damages (if any)
stated in the Appendix to Tender.

These delay damages shall be the only damages due from the Contractor for such default,
other than in the event of termination under Sub-Clause 15.2 [Termination by Employer]
prior to completion of the Works. These damages shall not relieve the Contractor from his
obligation to complete the Works, or from any other duties, obligations or responsibilities
which he may have under the Contract.”

The reference to termination may be an attempt to resolve the frequent argument as to whether delay
damages are applicable in the event of termination when this occurs after the time for completion. This
wording at least makes clear that the Employer is not limited in his recovery by the delay damages but
still the scope for argument as to whether delay damages are appropriate at all in that event.

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Silver Book

The grounds for extension of time are as follows:-

“(a) a Variation (unless an adjustment to the Time for Completion has been agreed under Sub-
Clause 13.3 [Variation Procedure]),

(b) a cause of delay giving an entitlement to extension of time under a Sub-Clause of these
Conditions, or

(c) any delay, impediment or prevention caused by or attributable to the Employer, the
Employer’s Personnel, or the Employer’s other contractors on the Site.”

Missing from the list are “exceptionally adverse climatic conditions” and “Unforeseeable
shortages in the availability of personnel or Goods caused by epidemic or governmental
actions”.

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