The Construction Law Shortcast: EP1 The prevention principle and time at large

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Welcome to the Construction Law Shortcast series where HSL Kramer's London Construction and Infrastructure Disputes team will be deconstructing fundamental principles of English construction law, all in just five minutes or thereabouts.
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I'm Noe Minamikata, Knowledge Council from the London Construction and Infrastructure Disputes Team.
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And I'm Xavier Milne, Senior Associate, also from the London Construction and Infrastructure Disputes Team.
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In our very first episode, we'll be focusing on two essential principles that underpin modern construction law, the prevention principle and time at large.
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So, Xavier, can you start us off by explaining what the prevention principle is and why it's so important in the context of construction contracts?
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Well, it's often overcomplicated, but put very simply, the prevention principle is a rule that a party cannot insist on the performance of an obligation which it has prevented the other party from performing.
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It's not a construction-specific principle, but it is one that the parties to construction contracts need to be particularly alive to.
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And why exactly is that?
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Well, for example, if the employer somehow interferes with the contractor's contractual rights and causes delay that stops it from finishing on time, the general rule is that the employer won't be able to hold the contractor to the original contractual completion date.
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Okay, and in those circumstances, how do the parties determine when completion needs to occur, if not by the original completion date?
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Normally, the contract will have a mechanism allowing the employer to reset the completion date where there's been an act of prevention, where it doesn't, or where there is an event that isn't captured by the mechanism, then time is said to be set at large.
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This means that the contractor's original obligation to complete by a specified date is replaced by a lesser obligation to complete the works within a reasonable time.
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And how would you determine what constitutes a reasonable time?
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You could probably dedicate an entire shortcast on that topic.
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But essentially, it'll be a question of fact and assessed by means of a broad consideration of what would, in all circumstances, have been a reasonable time for performance based on the contract in question.
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And are there any other consequences to time becoming at large?
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Another important consequence is that the employer can lose its right to delay liquidated damages.
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This is because delay liquidated damages are linked to a fixed completion date.
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So if the contractor is no longer held to a fixed completion date and only needs to complete within a reasonable time, the delay liquidated damages mechanism becomes inoperable and therefore falls away.
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Where this happens, an employer can still claim general damages, but it would need to overcome additional legal hurdles.
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For example, proving actual loss, which it wouldn't have to do if liquidated damages were available.
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So how do parties address the risk of unintentionally triggering the prevention principle?
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It's important to remember that the prevention principle operates as an implied term.
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It's not an overriding legal rule.
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So if the parties have expressly provided for the consequences of employer acts of prevention and neutral events in their contract, the party's agreement will usually prevail.
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As I mentioned earlier, the way the parties usually address the risk of the prevention principle being implied is by drafting broad extension of time provisions into their construction contracts.
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We'll talk about extension of time provisions in more detail in the next episode, but perhaps you can give us a flavor of how they operate.
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Sure.
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Extension of time provisions allow a new completion date to be fixed where the contractor has been delayed by the employer or where there has been a neutral event that the parties have agreed will entitle the contractor to an extension of time.
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There is often also a reserve power that allows the employer to extend time for completion at its sole discretion.
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This preserves the contractor's obligation to complete by a new date rather than within a reasonable time, and importantly, the employer's right to liquidated damages for delay.
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Okay, and to wrap up our whistle stop tour of the prevention principle and time at large, can you sum up the key takeaways?
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Of course.
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So the prevention principle stops a party from insisting on the performance of a contractual obligation where it's prevented the other party from performing.
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Where the prevention principle applies, time is set at large.
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This means the original completion date is replaced by a lesser obligation to complete within a reasonable time.
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This can lead to delayed liquidated damages becoming inoperable.
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Remember, though, that the prevention principle operates as an implied term.
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Because the prevention principle can't override any express contractual terms, the completion date and any liquidated damages will usually be preserved where the contract includes properly drafted extension of time provisions.
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Thanks, Evia, and that brings us to the end of this episode of the Construction Law Shortcast series.