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Dispute avoided concerning omission of works and loss of profit

Mark Holden-Smith

Updated: Apr 5, 2023



Overview

Our client (a Sub-Contractor) had parts of its contract works omitted by the Contractor and given to other Sub-Contractors, and the Sub-Contractor was concerned about the money it would lose but wanted advice on, if the omission of works was a material breach of the contract and how to proceed in recovering from the loss.


The Advice

We reviewed the wording of the instructions concerning the omission of works and reviewed the terms & conditions, the other contract documents, and the common law provisions concerning the likely proper interpretation of the contact in this case, and concluded the Contractor was only entitled to omit contract works altogether and was not entitled to give the contract works to other contractors, meaning the Contractor was shown to commit a material breach at least when the other contractors started the works. The sub-contract provided for termination following a material breach, so the Sub-Contractor was advised the available options as provided by the express terms of the contract and the common law position on the interpretation of the contract provisions, which were to either:


a) Terminate the Sub-Contractors employment in accordance with the terms of the contract and claim payment in accordance with the termination clauses to include a claim for loss of profit.


b) Affirm the contract, thereby waiving the right to terminate, but still retain the right to make a claim for loss of profit as damages.


c) Accept performance of the contract thereby waiving the right to terminate and the right to claim damages.


Accordingly, under the circumstances of this case, we advised the Sub-Contractor that option b) may be the best way to proceed.


The Result

The Sub-Contractor confirmed it was affirming the contract in respect of the repudiatory breach, agreed a figure for loss of profit and carried on to perform the remainder of the contract without the need for a dispute and to the benefit of both parties, and the Employer.


Contact

If I can help you with problem relating to a loss of profit, or any other contractual claim, please do not hesitate to get in touch.


Tel: 07834284308


Free Preliminary Review


I can provide a free review of any contractual problem so I can give objective advice and to allow us to discuss viable options on how you may proceed.

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