Introduction – Concurrent Delay
Concurrent delays have been subject to much discussion in the field of construction. Depending on the law applicable to the contract, disputes concerning concurrent delays can be decided differently making it of high importance that the parties deal with concurrent delays in the contract to clearly set out their intends.
Concurrent delays in construction can be defined as two or more independent events, at least one which risk contractually can be attributed to the employer and at least one to the contractor, operating concurrently to cause delay to the project. Several concurring causes of delay can easily muddy the picture calling for attention on concurrent delays when drafting and negotiating the construction contract.
Why is this important?
Delays are a common subject of disputes in construction as these often have severe financial consequences for both parties to the contract. Delay is therefore often bound to consequences as (liquidated) delay damages from the employer’s side and claims of extension of time and costs from the contractor’s. Consequently, parties should strive to regulate different circumstances of delay and the consequences hereof extensively.
Case law show that different approaches have been applied depending on the applicable law of the contract. These approaches can mainly be set out as: Emphasizing the dominant cause of delay, apportionment based on the level of fault of each party, and the Malmaison approach. To ensure predictability, the parties must thus familiarize themselves with the leading approach of the applicable law and take this into consideration when determining how concurrent delays should be regulated under their contract.
The leading stance under English law is the Malmaison approach. Recent Danish case law also appears to be moving in this direction and German legal scholars also prefer consequences similar to this approach as they are most in accordance with German statutory law. Following the Malmaison approach, concurrent delays consisting of a relevant event (entitling the contractor to extension of time and costs) and a contractor risk event grants the contractor full extension of time (postponing the time when the employer can claim delay damages) equal to the period of delay caused by the relevant event, notwithstanding the concurrent effect of the contractor’s own default. In terms of loss, a strict “but for” approach is often applied, resulting in the claim of loss failing as the contractor is not able to prove that such loss would not have been suffered “but for” the relevant event. Combining these two limbs, the Malmaison approach has often been referred to as the “time, but no money” approach.
If the parties prefer an allocation different from the approach under the applicable law, they must exercise their freedom of contract and agree on specific business terms that deal with the consequences of concurrent delays. Depending on the specifics of the project and the work to be performed by the contractor, different approaches can be chosen, e.g. no entitlement to time extension for contractor, entitlement to extension of time, or an apportionment based on responsibility. However, a party using standard business terms (pre-formulated and applied to several contracts) must in some jurisdictions, including Germany, be cautious in using business terms that constitute an unreasonable disadvantage to the other party compared to the principles of statutory provisions as such might be ruled ineffective.
What to consider:
- How should the risk of concurrent delays be allocated under the contract?
- What should be the consequence of a contractor delay concurring an employer delay?
- What should be the consequence of an employer or contractor delay concurring Force Majeure or adverse weather conditions?
- Which events should be considered relevant?
- If the contract is silent on the issue of concurrent delays, the parties should not assume that the silence operates to their benefit.
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