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T017 Termination & remedies for breaches outside the Contract

GENERAL
1. buiding contract have previsions for breaches e.g. failure 2 give possession = deferment clause or EOT = variations
2. serious breaches - JCT contract contains provisions allowing termination of the employment of MC
3. JCT section 8
4. To say that the contract is 'terminated' is not strictly correct because while the parties are discharged from any further obligations, they remain bound by those obligations that accrued before the breach
TERMINATION DEFINITION
1. where the contract works are lawfully stopped under the contract
JCT TYPES OF TERMINATION
1. TERMINATION BY EMPLOYER
  1. GROUNDS
    1. Wholly/substantially suspends works without reasonable cause
    2. fails to proceed diligently and reguarly
      1. TheMC should plan the works/lead & manage w.force/provide sufficient and proper material & labour resources, employ competent tradesmen so that the works and obligations are carried out to an acceptable standard
    3. Fails to comply with written instructions for the removal of work/goods/materials not in accordance
    4. Unauthorised assignment/ contracting
    5. Failure to comply with CDM regulations
    6. Guilty of corrupt practices relating to contracts
    7. Insolvency
  2. PROCEDURE
    1. For items 1 to 5 a WRITTEN NOTICE must be given 2 the MC specifying default
    2. the MC has 14 days to stop the default
    3. if they dont the emp has a further 10 days to issue a 2nd notice terminating their employment
    4. notices must be hand delivered
    5. if the contract is not terminated but the MC repeats the default there is no need to give a warning just the 2nd notice
  3. CONSEQUENCES
    1. all contractural provisions 4 further payment to MC (inc retention) ends
    2. emp can employ others 2 complete the wrks and make use of MC temp bdg/plant /material
    3. OR CA instruct MC to remove all equipment
    4. MC gives employer copies of any CDP docs
    5. if requested, the MC has to assign the benefit of any sub-contracts/supply contracts 2 emp free of charge within 14 days of termination
    6. statement of account issued - given in a reasonable time from the completion of the works to the completion fo MG
      1. the account sets out
        Expenses incurred by emp in completing wrks, inc direct loss/damage
        the total MC would have earned had they completed the wrks
        total of any previous payment 2 the MC in interim certs
        The difference is a debt payable
2. TERMINATION BY CONTRACTOR
  1. Clauses 8.8 - 8.10
  2. GROUNDS
    1. Failure of emp 2 fully pay properly within the time periods
    2. Interference by emp in the issue of any certificate
    3. Suspension of wks for a continuous period due 2 prevention/ default by the emp
      1. Default period is 2 mths
    4. Unauthorised assignment by emp
    5. Failure of the emp to comply with CDM regs
    6. Insolvency of emp
  3. PROCEDURE
    1. MC must issue written notice 2 emp stating default (exp insolvency)
    2. The emp has 14 days to remedy them
    3. if they dont - MC has further 10 days to issue another written notice to terminate
    4. For insolvency - termination can occur with the issue of just 1 written notice
    5. if termination doesn't occur this time, any repetition of the default enables the MC 2 terminate immediately with the issue of a written notice
  4. CONSEQUENCES
    1. removal all equipment from site
    2. give emp 2 copies of any CDP elements
    3. prepare statement of account
      1. Prepared as soon as practicably possible
      2. INCLUDES
        Value of works properly executed at the time of termination
        L&E due 2 MC under the contract
        The cost of removal from site
        the cost for any materials already ordered that the MC is obliged 2 pay
        loss/damage suffered by MC due 2 termination
        amount of previous payments paid under interim certificates
        difference is DEBT PAYABLE
        PAID WITH 28 DAYS
3. TERMINATION BY EITHER PARTY
  1. Clauses 8.11
  2. GROUNDS
    1. force majure
    2. civil commotion/ terrorism
    3. Loss/damage caused by specified perils (fire/floods etc)
    4. exercise of stat power by UK Gov directly affecting the wrks
  3. B4 MUTUAL TERMINATION = When whole/substantial part of the wrks is suspended for the continuous period sated in the contract particulars
  4. PROCEDURE
    1. At the expiry of the stated continuous period, either party may issue a written notice to the other party stating that they intend to terminate in 7 days
    2. if suspension is still occurring after the 7 days they should issue a further notice to terminate
  5. CONSEQUENCES
    1. The MC has 2 remove all materials and equipment from site & give emp 2 copies of CDP docs
    2. OR... emp can require the MC 2 provide all the necessary info 2 enable them 2 prepare the account within 2 months of the end of termination
      1. FINAL ACCOUNT
        prepare in a reasonable dispatch and within 3mths from the date that the MC provided info i.e. prepared within 5mths from termination
        value of wks properly executed at the pt of termination
        L&E due 2 MC under contract
        cost 4 removal from site
        cost for any materials already ordered that the MC is oblidged 2 pay 4
        loss/damage suffered by MC due to termination ONLY IF TERMINATION WAS DUE TO SPECIFIED PERIL caused by negligence/act of emp
        amount of previous interim certs
        difference is debt payable
        pay in 28DAYS
JCT TERMINATION P
HGCRA 1996
1. enables MC to suspend performance of their contractual obligations if they have not received full payments of amount dues by the final date without withhold notice.
DETERMINATION VS TERMINATION
1. determination means quality that makes u continue trying to do something even when this is difficult or the process of deciding something officially.
2. termination is the act of ending something
FRUSTRATION
1. a situation may arise in which it is not possible for the contract 2 b completed without the default of any party e.g;. new legislation may have bee passed during the contract which could make further activity illegal
2. its a legal doctrine which may bring about termination of a contract when external events make the contract either:-
  1. illegal
  2. impossible 2 perform
  3. radically different from orig bargain
REMEDIES FOR BREACHES OUTSIDE THE CONTRACT
1. 3 TYPES
  1. Damages
    1. any breach of contract either serious or minor
    2. ASSESSMENT
      1. to put the innocent party back into the position they would have been in had the breach not happened
      2. compensatory not PUNITIVE (intended 2 inflict punishment)
    3. CONDITIONS
      1. Actual loss has to be suffered
        this might stem from the breach
      2. mitigating measures should have been taken by the innocent party
  2. Set off abatement
    1. SET OFF
      1. Where the emp refuses to meet a MC claim 4 payment because they have a cross-claim that would reduce or cancel out the payment
    2. EQUITABLE SET-OFF
      1. Where the claim & counter claim are closely linked e.g. under the same contract
    3. ABATEMENT
      1. Where the emp asserts that the MC claim is not worth the value they are claiming i.e. due to physical defects 2 the works
  3. REPUDIATION
    1. REPUDIATION
      1. termination 4 breach is where one party behaves so badly that the law give the other party the option of ending the contract
      2. common law right to terminate or 'repudiate' a contract can arise in 2 ways
        either party make it clear they have no intention of performing their side of the bargain
        DETERMINATION
        e.g. suspension by emp for no reason/ failure to complete works regularly and diligently
        either party may may commit serious breach which is treated as having no intention of carrying out their obligations
        REPUDIATORY BREACH
      3. Employer breaches that constitute a breach
        refusal of posession
        continued refusal 2 pay for sums due
        withholding certificates
        hindrance 2 contractor
      4. MC actions constitute a serious breach
        Abandonment/ unjustified suspension of the works
        very serious defects
        Extreme delay where time is of the essesne
        general rule is that time is not of the essence unless the contract expressly so provides
      5. INNOCENT PARTY HAS 2 DECIDE
        AFIRM
        Force contract obligations
        REPUDIATE THE CONTRACT
        terminate
      6. CONSEQUENCES
        Both parties r released from their obligations under the contract BUT the contract regarding LIABILITY/ACCESS DAMAGES & DISPUTE RESOLUTION ARE STILL VALID
    2. WHAT?
      1. Termination of a contract at common law
        for serious breaches
    3. TERMINATION VS. REPUDIATION
      1. TERMINATION under contract only terminates obligations 2 carry out wrks but NOT release parties from any further obligations
      2. REPUDIATION is breach but it doesn't necessary mean that the contract must be terminated as the innocent party gets to decide to affirm or repudiate

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T017 Termination & remedies for breaches outside the Contract

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	Created by alison_patey0437 over 11 years ago