CONSTRUCTION

JULY 2010

CONDITION PRECEDENTS
EDUCATION 4 AYRSHIRE LIMITED V SOUTH AYRSHIRE COUNCIL
This case is a cautionary tale for
contractors who enter into
contracts that require a strict
formal process in order to obtain
time and money.
Education 4 Ayrshire Limited
entered into a Public Private
Partnership contract with South
Ayrshire Council to design and
construct six schools. The
Scottish Courts had to determine
the meaning and effect of a
condition precedent clause.
Conditions precedent are
preconditions that need to be
fulfilled before other provisions of
the contract apply. They are
regularly used in FIDIC and NEC
contracts to prevent contractors
from claiming an extension of
time or additional payment unless
they provide written notice of the
delay event, within a prescribed
time limit.
In this case, the Contractor had to
carry out the works so that certain
phases of the project achieved
service availability on Target

Service Availability Dates (TSAD).

Under Clause 17.1, the
Contractor had to give notice if it
could not achieve a TSAD within
20 Business Days of the
occurrence of the delay event,
(TSAD Notice).

served in accordance with Clause

17.1. The Contractor also
informed the Employer within the
TSAD Notice that it would serve a
full claim for an extension of time
and damages in accordance with
Clause 17.6.

The contract had a separate

notice regime for extension of
time claims and compensation for
delays caused by defined events
known as, Works Compensation
Events (WCE). Under Clause
17.6, if the Contractor wanted to
claim an extension of time and
compensation, it had to serve a
second notice within 20 Business
Days of the occurrence of the
WCE, (WCE Notice). The
Contractor would not be entitled
to any relief if it failed to serve a
WCE Notice.

The Contractor did not serve a

separate WCE Notice, and so
relied on its TSAD Notice in
support of its claim for an
extension of time and damages.
The Employer agreed that the
Contractor had served a valid
TSAD Notice, but rejected the
Contractor's claim because it had
not served a separate WCE
Notice in the format required by
Clause 17.6.

The Contractor served a TSAD

Notice informing the Employer
that a section of work would be
delayed because of asbestos in
an existing building. The TSAD
Notice expressly stated that it was

The Contractor took its claim to

Court and argued that Clause
17.6 only required it to put the
Employer on notice of a claim. It
had informed the Employer that it
had a claim for time and money in
the TSAD Notice and so the
single notice complied with
Clauses 17.1 and 17.6.

The Court preferred the

Employer's submissions. Clause
17.6 had strict and clear
provisions as to what had to be
done by the Contractor in order to
obtain relief, to include the
addressee, timing, and content of
a WCE Notice. Compliance with
Clause 17.6 was a condition
precedent to the Contractor's right
to claim compensation. The
Contractor had not complied with
the level of formality required by
Clause 17.6. The Court held that
it would not interfere if a party
failed to follow the contract
procedure, and so the Contractor
lost its right to extra time and
payment.
This decision follows the case of
Steria Limited v Sigma Wireless
Communications Limited, where
the English Courts confirmed that
they will not interfere if the
contract has a clear and
unambiguous requirement to
serve a written notice as a
condition precedent for an
entitlement to contractual relief.
If you would like any further
information, please contact:
Jonathan Pawlowski
DDI: +44 (0)20 7293 4349
E: jpawlowski@dac.co.uk

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