In view of the significant implications of project delay, some developers tend to transfer as much time-related risk as possible to contractors by removing the contractors' entitlements to extension of time (E.O.T.) in building contracts. They perceive that their interests can be best served by maintaining a risk-free position. However, not all these risk aversion provisions in a contract are legally enforceable. This study aims to develop guiding principles for developers to include legally sound E.O.T. provisions in construction contracts. Support is drawn from both literature and established principles of law in the United Kingdom and Hong Kong. In addition, eight construction professionals were interviewed to understand their pragmatic considerations in practice and possible consequences of including inappropriate E.O.T. provisions in contracts. It is generally appreciated that for delays caused by neutral events, contractors were held liable to the delays no matter the corresponding E.O.T. entitlements were omitted or deleted from contracts. But for delays caused by developers or their representatives, omission of related E.O.T. provisions might render time “at large” and inappropriate deletion of the provisions might risk being classified as unfair contract terms which may be unenforceable in courts. Therefore, to secure time and cost certainty, developers should appreciate the legal rules first and then understand the practical considerations of contractors' tender strategies to strike for a balance between fairness to contractors and attaining their own project goal.
|Number of pages||21|
|Journal||Construction law journal|
|Publication status||Published - 2010|
- Construction contracts
- Contract terms
- Extensions of time
- Unfair contract terms