The Importance of Giving Notice

It is several years since I addressed the issue of notice provisions in claims clauses. Although almost all “standard” form contracts contain notice provisions, many of them extremely onerous, contractors continue to lose their rights through failure to comply.

Most South African forms of contract can trace their roots back to English forms of contract. Traditionally such forms did not impose onerous notice provisions and even those that required notice did not usually link the failure to give notice with the loss of rights to claim.

In South Africa the introduction of the civil blue book, GCC 90, heralded the introduction of a more rigorous approach to the requirements for notice. This was followed by the building contract, JBCC 91, which similarly now made it clear that a failure to give notice would also result in a loss of rights to claim.

Interestingly the FIDIC contracts could not seem to make up their minds whether they wanted notice provisions to be time barring or not. The 1987 red book (4th Edition for Works of Civil Engineering) specifies time periods for claims for extension of time under Clause 44 as well as under the general claims clause, Clause 53, but whilst a failure to give notice might reduce the compensation payable it is not fatal to the claim. The 1987 yellow book (for Electrical and Mechanical Works) is similarly worded and does not create time barring. However, the 1995 orange book (Turnkey) requires notice of a claim for extension of time under Clause 8.3, but this is not a barring clause. If the contractor wishes to claim for additional payment under Clause 20.1, not only must he give the relevant twenty eight day notice but under this contract he will be barred if he fails to comply.

This apparent lack of common philosophy was no doubt caused by an absence of overall direction from FIDIC and the fact that each of the contracts was drafted by different committees.

The latest suite of FIDIC contracts (1999) leaves the contracting parties in no doubt – failure to give notice will be fatal to the contractor’s claim.

Why then is it that, in the face of unambiguous requirements in the contract, contractors are still losing their rights to claim?

I believe there are several reasons viz:

  1. Ignorance
  • Despite having a general knowledge of contractual requirements, the contractor’s decision maker, be he contracts manager or site agent, has not bothered to read the specific clauses and acquaint himself with the express requirements;
  1. Conflict Avoidance
  • The submission of a claim, or even a notice to claim, is viewed by some people as being confrontational and likely to lead to a breakdown of relationships;
  1. Intimidation
  • Frequently the supervising officer (project manager, architect, engineer) puts out strong vibes that the contractor will lose his co operation if a climate of claims is created by the early submission of a notice for extension of time or cost;
  1. Do Not Worry – We’ll Sort it Out Later
  • Under this regime the contractor is aware of his obligation to claim but is persuaded against claiming on the basis that, if he gets on with the job and if there is a problem at the end of the contract, it will be sorted out amicably.

The harsh reality is that, if parties bind themselves to a contract which obliges the contractor to give notice, particularly where the notice is linked to a barring clause, no deviation from this requirement is permissible.

Supervisory officers rarely have the authority to amend the conditions of the contract and may well find themselves on the receiving end of a claim for damages from the employer if they do not apply the conditions of contract. An architect, engineer or project manager has no latitude in this regard. There is only one solution and that is if the contractor believes a situation has arisen which may lead to a claim then he must give the notice.

It is the exception rather than the rule for contracts to reach completion without a change of circumstances giving rise to a potential claim entitlement. Employers, who wish to exercise tight control by way of time barring notice provisions, must expect contractors to protect their position by submitting appropriate notices. Employers cannot take exception to this since they have invited the submission. Contractors, on the other hand, have only themselves to blame if in the face of clear and unambiguous claims clause requirements fail to give the requisite notice.

 

Chris Binnington

THE CIVIL ENGINEERING CONTRACTOR SEPTEMBER 2002