"What a day for a daydream”

One of the arguments in favour of using standard form contracts as opposed to one of kind documents is that their evolution, over time, improves the content of the document and ensures that users will not be faced with unexpected or unusual results not anticipated by the draftsman at the time of creating the document. In addition, standard form contracts are usually exposed to considerable scrutiny by members of the professions as well as the contracting fraternity who, one would expect, would identify, before publication, drafting anomalies.

However, the construction contract is a complex document. It aims to regulate significant areas of the interface between the Employer and Contractor which interfaces are either not dealt with at all within the common law or, alternatively, are not dealt with in a way which the draftsman thinks appropriate. So, despite all the checks and balances which ought to preclude drafting anomalies being included in the final document, it is surprising how many such anomalies remain intact at the time of release of standard form contracts.

By way of example take GCC 2004 the blue book for construction works as published by SAICE. This document replaced the outdated GCC 1990 which had been drafted by the Monty Brown committee and was used as the basis for the COLTO 1998 document for use principally for road construction contracts.

GCC 2004, in common with many contracts, opens with a section dealing with Definitions, Interpretations and General Provisions and clause 1.6 of this section somewhat inelegantly defines the word “Day” as:

“Day” shall mean a calendar day and where a specific number of days is allowed in the Contract for the performance of any act or is stipulated for the extinction of any right or the duration of any event or circumstance, the special non-working days and the days falling within the year-end break as stipulated within the Contract Data and the day from which the period concerned is stated to commence shall be excluded from the calculation of the number of days concerned.”

So far so good, or is it? If “day” means a calendar day, then does not the exclusion of the special non-working days and the days within the year-end break mean that a “day” is, in fact, a working day? But, if that is correct, why is a “day” a “calendar day”? It would necessarily follow from the definition of “day” that this definition shall apply wherever the word “day” appears. So, for example, the “28 days” notice period for the Contractor to notify a claim under clause 48.1.1, is in fact a working day period since it is the period for the giving of notice which would surely constitute either the performance of an act and/or the extinction of a right.

So what difference does it make, you may ask. Well, the first problem is that we now have a potential uncertainty which could lead to dispute. If the Engineer interprets “days” in this clause as true “calendar days” and the Contractor holds that it is “working days” then the possibility exists for the Contractor to be time barred under clause 48.4 if the Contractor computes the period of 28 days inclusive of all the non-working days in the period concerned and, as far as the Engineer is concerned, gives notice outside the “28 day” period.

A more interesting argument however may well result from use of the word “day” in the penalty provision, clause 43.1, which provides:

…, the Contractor shall be liable to the Employer for the sum stated in the Contract Data as a penalty for every day which shall elapse between the Due Completion Date and the actual date of Practical Completion.”

Does this penalty period exclude non-working days and the days within the year-end break? Certainly the loss which an Employer would suffer as a result of late Completion is not limited to working days. Such an interpretation would surely not be logical so let us revisit clause 1.6. It appears that the draftsman is intending to create a definition which applies to two separate conditions. Firstly, day shall mean calendar day. What a pity the draftsman did not stop at that point and thereafter separate the next portion of the definition relating to “where a specific number of days is allowed in the contract for the performance of an act…” This latter part of the definition would seem to be directed at those clauses which expressly state a number of days within which something must happen.

This anomalous result is however reinforced by the Contract Data Part 1 provided by the Employer, since under “Clause 1.6 and Clause 38”, the special non-working days are to be stipulated by the Employer and this section of the Contract Data concludes with the words:

“These days will also be excluded from time calculations”!

What is the Engineer doing when he computes a penalty if not computing a time calculation? 

Furthermore, Clause 43.1of the Contract Data provides for the Employer to stipulate the “Monetary value per day”, which once again requires the application of the somewhat confusing definition of “day”.

So have contractors been time barred for giving notice beyond the 28 day period where a non-working day or year-end break has intervened? I am quite sure they have! Could contractors argue that the extent of penalties for the number of calendar days between Completion and the actual Completion Date should be reduced by the deduction of special non-working days and the year-end break?  Yes, quite possibly arguable!

If contractors manage to recover any money based on this commentary, a small donation to a charity of my choice would be appreciated. Don’t forget, charity begins at home!

THE CIVIL ENGINEERING CONTRACTOR SEPTEMBER 2007