Free Law Dissertations - Contract Law In Both (a) And (b) Advise Manchester Airport Of Their Legal
Brief
Contract Law
In both (a) and (b) advise Manchester Airport of their legal position.
Problem A
A major design, build, installation and service will constitute an engineering, construction contract that is generally written in the standard form of the Institution of Civil Engineers (ICE). This will include the Design and Construct Conditions of Contract.
For this case, if the above standard form contract has been utilised, it will be in adherence to the ICE 7th Edition of 1999, Measurement Version or the later 8th Edition of 2002, Term Version. It is also common for the work done under such contracts to be incurred by a sub-contractor and only an express request for no sub-contracting by the employer would give rise to any legal recourse.
Standard form construction contracts do not stipulate that time is of the essence, whereby late performance constitutes a repudiatory breach of a condition that creates a right for the employer to set the contract aside. However, the case of Lombard North Central plc v Butterworth shows that an express term that stipulates that time is to be of the essence will constitute a condition. Mustil LJ stated:
a stipulation that time is of the essence, in relation to a particular contractual term, denotes that timely performance is a condition of the contract
As a personal agreement, all rights of recourse for Manchester Airport are against ACME and not the sub-contractor. If time is of the essence, Manchester Airport may set the contract aside by treating the breach as the anticipatory breach of a condition that has been explicitly repudiated due to the declaration by ACME of being unable to complete the design and construction on schedule. Manchester Airport may also sue for damages amounting to the loss incurred by the delay. In addition, they need not wait until the breach actually occurs before they can take action and they can even win, despite the fact that the time of action is contingent upon the breach occurring.
Any negotiation of a new contract is fully at the discretion of Manchester Airport as only the innocent party in a situation of material breach has the right to prematurely bring a contract to an end.
If time is not of the essence, breach will still occur but this will constitute a breach of a warranty as opposed to a condition. This means that there will be no right by Manchester Airport to set the contract aside, despite the presence of an anticipatory breach. This became clear in the case of Decro-Wall International SA v Practitioners in Marketing, Ltd. The breach therefore does not go to the root of the contract and Manchester Airport will only be entitled to sue for damages resulting from the anticipatory breach.
However, where time is not of the essence, standard form ICE contracts often contain provisions relating to the extension of time.
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