This month the legal beagles at Berwin Leighton Paisner tackle the issue of a subcontractor who's being messed around by its developer and an M&E specialist denied recourse to common law. Plus, a clever argument about the existence of contracts
'We are pulling our hair out'
We are a small plumbing and heating company providing our services under a standard client order with contract costs and conditions. During the pre-tender stages we priced the works against the developer's issued programme. We are now seven weeks into the contract and we are pulling our hair out, as the developer has fallen behind programme by three weeks. We've requested meetings to discuss the disruption and the costs we are incurring by standing down our personnel. We are being ignored, and subsequently the client has issued three revised programmes. So, do we claim for disruption? And can we claim for standing down time?

To be clear, it is necessary to distinguish between delay, disruption and prolongation.

A delaying event may (depending on the contract) give rise to an entitlement to an extension of time. It may also give rise to a claim for prolongation, which is the extended duration of the work during which costs are incurred. An extension does not give rise automatically to an entitlement to prolongation costs (and vice versa). Whether you can claim for prolongation depends on the terms of the contract and the cause of the prolongation. It should also be borne in mind that a contractor has a general duty to mitigate the effect of delays caused by the employer.

Prolongation may arise from a variation, in which case the appropriate amount to be paid by the employer may depend on the valuation of that variation. If prolongation arises from some other cause not provided for in the contract, compensation is unlikely to include anything other than work actually done, time actually taken up and loss and expense actually suffered.

Disruption (as distinct from delay) is the disturbance, hindrance or interruption to a contractor's normal working conditions resulting in lower efficiency. If, in this case, it has been caused by the employer, then there may be a right to compensation either under the contract or as a breach of contract.

In general terms it is important to link the actions taken by the developer to the increased costs of working. Compensation for disruption is not merely the amount the work cost over and above the planned or tendered cost; depending on the establishment of the requisite cause and effect, the standing down time may be recoverable as a consequence of disruption.

Can you exclude common law?
I am the commercial manager for an M&E contractor, and have the following query: can a construction contract deny us our common law rights for breach of contract? That is, can it say your remedies are listed in the contract and if an event/breach occurs that is not listed you cannot fall back on the common law? Normally I expect to recover money for variations under a standard form 鈥� clause 13 in JCT and loss and expense under xyz clause. Failing this, my recovery for breach is via the common law.

In brief, the answer is yes. One of the fundamental principles of English law is that parties are free to determine for themselves the obligations that they will accept. The courts are generally unwilling to interfere in a contract negotiated between two commercial enterprises and this includes an unwillingness to interfere with an exclusion clause.

There are exceptions to this 鈥� for example, when one of the parties is acting as a consumer or on the other party's written standard terms of business. In these circumstances, section 3 of the Unfair Contract Terms Act 1977 imposes a requirement of reasonableness on a clause excluding or restricting liability. But it is generally thought that a contract made on a standard form such as the JCT is not a contract on the contractor's written standard terms of business.

It鈥檚 perfectly logical 鈥�

Negotiations were carried out with a firm for the supply of cleaning materials. It already supplied goods on an ad hoc basis but we wanted to regularise the relationship. A document was drawn up, containing all the terms to which the firm agreed, and was sent to it to be signed. The firm made some minor amendments to the payment dates, marked the contract 鈥渁pproved鈥� and returned it. We filed the document when it was returned and payments were made in accordance with the document. However, problems have now arisen with the supply of the cleaning materials and the firm is maintaining that there is no contract between us.

The question that arises is whether a contract exists. In order for the contract to be formed, the acceptance must mirror the offer. In this case, your supplier made some amendments. This could be regarded as a counter-offer, which brings the original offer to an end. Therefore, the amended contract can be construed as the actual offer, and the burden is on you to accept the altered terms. Payments were made in accordance with it without any challenge. This demonstrates acceptance of the counter-offer, since an offer can be accepted by conduct. Therefore, it is likely that a contract does exist between you, and its terms may be referred to in any dispute.